We are the banks
The past 18 months was a story about the collapse of lending to banks and by banks - and about how we as taxpayers came to the rescue by providing £600bn of loans, guarantees and capital to the banks, to keep them afloat.
The story of the next year will be about the implications of this continued shrinkage in the availability of credit and about the implications of this massive, unprecedented support given to banks by taxpayers.
As a nation, our fortunes in 2009 will be conspicuously tied to the fortunes of our banks as never before.
First, an economic recovery rests on the ability of banks to support viable businesses during what increasingly looks like a severe recession.
Second, and as important, the balance sheet of the British public sector can be seen as the aggregated balance sheet of some substantial banks - because the state now controls three banks, Northern Rock, Bradford & Bingley and Royal Bank of Scotland, and will have a huge stake in a soon-to-be created fourth, LloydsTSB/HBOS.
It means that if the perceived credit-worthiness of our banks - with their trillions of pounds of assets and liabilities - were to deteriorate further, that would have an impact on the perceived credit-worthiness of the state.
As never before, it matters to all of us that the banks run themselves in a prudent way. In an extreme and highly unlikely case, if the markets viewed our banks as recklessly managed basket-cases, that would have an impact on the value of sterling and on the ability of the government itself to borrow.
So our prospects and welfare depend to a huge extent on an institution that was created a few weeks ago by the Treasury to manage its investments in the banks, UK Financial Investments (UKFI).
It's probably no exaggeration to say that - for the coming year or two at least - UKFI will be as important to all of us as the Treasury, or the Bank of England or the City watchdog, the Financial Services Authority.
UKFI's primary aim is to "protect and create value for the taxpayer as shareholder" - while also making sure that the banks we own provide "competitively priced" loans to small businesses and homeowners "at 2007 levels".
Those objectives are not quite irreconcilable - in that the banks over which it has sway should be capable of providing substantial credit to the housing and small-company markets without chucking good money after bad, even though this is a dire period of economic contraction and proliferating bankruptcies.
But, for the avoidance of doubt, UKFI has no ability to increase the supply of credit in the economy as a whole.
Remember that the ability of banks to lend is anyway being undermined by losses on the stupid loans they made in the boom years and also by the collapse in the price of houses, property and shares, which slashes the value of vital collateral that backs loans.
So many banks are lending less to big companies, they are lending less for commercial property transactions, they are lending less to City institutions, they are lending less in the form of unsecured personal loans.
Lots of overseas institutions are cutting back significantly on the bounteous credit they provided directly to the real economy in the UK during the preceding few years.
Also many bigger companies that borrow directly on wholesale markets by selling bonds and other securities are finding it much harder and more expensive to raise money.
And credit provided between companies that buy and sell to each other is being massively restricted, by a collapse in the availability of insurance for such credit.
All of which can be summed up as "ouch" for businesses and households - and is the primary reason why some companies are going bust, and why those that will survive are reducing investment and cutting jobs.
So even with £600bn and rising of support for banks from taxpayers, our banks simply don't have the resources to keep afloat real companies - manufacturers, exporters - that are vital to the future of the British economy.
Which is why early in the new year, the Treasury will announce details of yet more taxpayer lending, this time to ensure that credit is provided to viable and strategically important companies - such as the more efficient carmakers.
The line between private sector and public sector, which became blurred in 2008, may become almost impossible to see in 2009.
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THE STATE (UK) IS NO LONGER
CREDITWORTHY.
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10 years of continuos debt is a serious bummer if it does not even get reduced and is a heavy weight to bare on you shoulders.
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Gloomy thoughts Robert. We'll see what happens next year. Oh by the way have a nice Christmas. You've done a great job over the last year.
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The ever falling value of Sterling
will impact on food prices on
the shelves next year and
distort the unrealistic inflation
projections.
A further 30% fall against the
Dollar and Euro is on its way over
the next 6/7 months. . .
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What will also unfurl is how this government perceives the role of those exceptionally well paid individuals in charge of the failed institutions.
If they stay then I think Mr. Brown can kiss his proverbial goodbye. If they go then he will have regained some credibility with life long labour voters.
Just a small reminder to Mr. Brown. There is no such thing as an exceptional individual, just someone in the right place at the right time and more often than not a little bit of help from family and friends. There are many many folks capable of doing the same job for much lower pay.
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A Marxist analysis of the economic crisis:
http://www.wsws.org/articles/2008/dec2008/nbe1-d19.shtml
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My fear is that the money pledged by the goverment is only enough to stop the banks going bankrupt. The banks still do not have enough money available to lend to the wider economy.
With asset prices falling, and bad debts increasing due to the contracting UK economy, our banks' balance sheets will come under increasing pressure during 2009.
There is a significant risk the banks will need to come back and ask for more money from the government. It's either that, or they just sit tight and refuse to lend.
The economy will not start to recover until all the bad debts have been unwound and written off. This will take a 2 or 3 years to process.
In the meantime, we have to deal with the falling value of sterling, which makes it more expensive for UK institutions to borrow money from abroad, thus adding to the liquidity problem.
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Every victim was in the wrong place at the wrong time.
Skip town keep moving to migrate westwards
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Its unusual to go into a recession
with the BANKS BEING BUST at
the OUTSET.
But why our MESSIAH thinks that
MORE BORROWING will RESOLVE
the problem leaves me COLD
with FEAR for his SANITY!!
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A Marxist analysis (Part 2):
http://www.wsws.org/articles/2008/dec2008/lect-d20.shtml
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Double or Quits!
Gordon Brown says to Mervyn King, "Could you help me Mervyn? I'm a bit short of money at the moment. I've taken on this business of saving the world, and a prime minister's expense account goes nowhere these days."
Mervyn says, "Well we're not doing much on loans these days, you know, but I'll make an exception for you. What sort of money were you thinking of?"
Brown says, "A hundred thousand, Mervyn."
Mervyn says, "That's an awful lot all at once....."
"Well, I'll tell you what I'll do," says Brown,"I'll open a savings account with you, and when you lend me the hundred thousand, I'll put it all in my savings account, and draw on it when I need it. And the interest on the savings can go to help pay off the loan, you see."
Mervyn hums and ha's a bit, and says, "Well Gordon, as your Bank Manager, I have to ask you, when would you be expecting to pay all this off?"
Brown declares, "When I've saved the world, of course."
"But Gordon," says Mervyn, "what will you do if you don't save the world before you spend all the money? or if we have a general election before then?"
"Well that's easy," says Gordon. "In that case you lend me two hundred thousand. Then I pay off the first loan, and fill up my savings account, and we go on from there."
Mervyn thinks about it and says "Well that seems reasonable, Gordon. I'll make it a hundred thousand pounds available to you right away. There now."
"Pounds!" says Brown. "I was talking about MILLIONS!"
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We don't need to teach our children maths because they won't need it now.
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#5 is spot on timing is everything.
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it sounds like the new capitalism will be about more poorer people and there will be different degrees of poor to distinguish the various poor and poor poor classes
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It may add to the debate to view: www.moneyasdebt.net
www.monetaryreform.org
Part nationalisation of banks in the western world should be viewed as an opportunity for governments to take back control of the money supply.
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it's panto season!
You couldn't write it any better!
Who is the Fairy Godmother?
When will the magic wand change their ways?
Gordon Brown et al obviously believe in Father Christmas coming to the rescue!
Have a good one everyone!
Tigs
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This comment was removed because the moderators found it broke the House Rules.
Indeed, Robert, we are all bankers today: only not by choice but by conscription.
My message to the political class is that often when conscript armies have been placed under severe and unjust stresses they have been known to mutiny.
We face an economic environment in which the life-blood of the economy, namely the provision of ever-expanding credit, has gone into progressive collapse. This process continues and will not get better until it can be seen that asset prices have hit the floor. This is believed to be between a year and eighteen months away.
There is also no doubt that in order to minimise the effects of this very negative circumstance there will need to be substantial credit provision to the housing and SME markets without chucking good money after bad. The good people have to be protected.
This means that taxpayer funded credit must only be supplied to individuals with a sound credit record and companies with defined prospects of producing profits. This should not be allowed to develop into a credit free-for-all for the usual suspects.
What we now need from the government is a proposal as to how we are to start establishing the fundamentals of our eventual recovery and future economy.
I am very uncomfortable knowing that this essential function is in the hands of a government which has demonstrated time and again that its only priority is its own secular interest.
Over the next twelve months these issues are going to loom larger and larger in the political firmament.
Yet I don't want to hear loose talk about the next election.
I want to hear talk about a National Government to initiate a public discussion with a view to creating a new political and economic consensus to replace the one which has so fundamentally failed.
The alternative is that we take to the streets which in terms of financial rectitude would be just stupid.
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As always, an incisive piece of journalism. I enjoy reading Robert's pieces - I may not always agree with him, but as is oft (mis)quoted, I will defend his right to break the news that we need to know.
Some commentators 'blamed' Robert for the so-called collapse of Northern Rock.
However, had Gordon 'Prudence' Brown not taken away the authority of the Bank of England over the banking system when New (sic) Labour came into Government, the Bank of England would have been able to resolve that situation.
Dithering Darling and the Farcial Services Authority are just as much to blame...........
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As stated here previously, we are entering into the next social economic phase of modern living. Social capitalism. This is not socialism nor is it capitalism. It is both, melded into one. We will see more and more of this kind of ownership split, ie, between regular share holders and us, the taxpaying block shareholder. However we are not directly represented on any board or at any shareholders meetings, except by proxy of course in the form of a minister or two, therefore our votes will be nonexistent and thus the power is kept nicely out of our hands, thereby finding the tricky solution of how to keep the people out of power while using them to support those in power.
We all know that the current situation is changing due to the words Sub Prime being almost nonexistent now on all media outlets. The new kid on the block is Global Economic Contraction. This monster will cover all ills from lack of money, lack of jobs, lack of food (soon to be back on the agenda as the issues were never solved), lack of cheap fuel (forget recent falls, fuel is a diminishing commodity and gas will soon sky rocket). Well I could go on, but it is the season to be merry. So I wish you your last real happy Christmas, because when you look back you will see it as being a time of innocence.
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Could be time to join the Euro - methinks!
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A Marxist analysis (Part 3):
http://www.wsws.org/articles/2008/dec2008/nbe3-d22.shtml
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5. At 09:23am on 24 Dec 2008, mar39241 wrote:
"Just a small reminder to Mr. Brown. There is no such thing as an exceptional individual, just someone in the right place at the right time and more often than not a little bit of help from family and friends. There are many many folks capable of doing the same job for much lower pay."
I totally agree - their are many people so wrapped up in their own self importance they expect to be paid huge amounts of salary and then get in a position where they can either influence their pay assessment or just give themselves the pay rises. They are probably right to think their job is more important than e.g. a footballer, but they are wrong to think they autumatically should get paid huge amounts of money.
The whole system is totally out of control
because it's easy to spend other peoples money - If organisations were run by people spending their own money they would be more careful about paying it out.
Here is a couple of examples :-
1. Chief executives of County Councils who get paid more than the Prime Minister.
2. The Chief of the Financial Services Compensation Scheme has paid her self ?? - £237,000 salary package per annum – a 32% rise since the previous year - more than the Prime Minister !!
Can anyone explain how a person who oversees the administration of a local council or a person who oversees the payment of compensation can be paid more than the Prime Minister ??!! How many life or death decisions do these people have to make ??!!
Good if you can get it ??!!
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So, now the UK Government (you and me) also own the toxic 'derivatives'. These debts and bets are worth some $500 trillion. Compare that to the GDP of the whole planet of just $50 trillion and you get some idea why this fantastic burden of debt and/or potential liabilities can NEVER be repaid.
True, the financial crisis started with sub-prime mortgages, BUT it is far deeper than that. After all the total of sub-prime mortgage debt is reported as being some $1.5 trillion, whereas world Governments have so far pump close to $10 trillion into the banks. If the problem was sub-prime mortgages, or now 'banks not lending to each other', this $10 trillion cash injection would have solved it long time ago.
The only solutions I can think of are
a) hyperinflation to degrade the whole of that debt (following Zimbabwe)or
b) legal cancellation of all derivative contracts (!!) or
c) collapse of the whole financial system incl just about all banks, and starting all over again.
If it comes to c) then that will include the UK economy as a whole, now that we own much of the problem. Thanks Gordon!
Pumping borrowed money into the economy in the utterly vain hope of recovery is just about the worst possible strategy.
And then the little problem of Energy and Growth.
2008 is the end of the Era of Growth (as growth is predicated on the availability of cheap energy) and 2009 will be the start of the Era of Decline.
Next year the world production of crude oil, for the first time in history, is likely to decline for geological, not political or economic, reasons. Peak Gas will follow some 10 years later.
No matter what investment is made in oil or gas fields, the total production from 2009 onwards will decline by perhaps 4% on average every year, thus our primary energy sources will halve every 20 years or so. This ‘peaking’ has already happened in 60 oil producing countries around the world, incl USA (1972) and UK(1999) and now, from 2009, global production will also begin to decline.
Most people believe that other forms of energy will take the place of oil and gas. That will not happen. There is currently no combination of alternative sources energy that comes anywhere near to replacing oil and gas.
The 1930s depression was bad enough, but this decline will be on a massively larger scale. To start with, it will be at least 40 years long. 40 years will take us to about 25% of current energy usage, which is about the level of energy we can expect from all renewable sources combined. So at that stage, provided Governments have been wise enough to have invested massively in renewable energy, renewables may be able to take over from fossil fuels and perhaps stabilise the world economy.
However, pumping trillions of dollars into rescuing banks and car manufacturers and further trillions into ‘restarting the economy’ may impoverish governments to a point where no investment will be possible where it is really needed, such as renewables.
So, what should we do now? I suggest:
a) embrace the Green New Deal incl. £50 billion per year invested in renewables in UK. This £50 billion investment will be easily repaid through lower import bills for fossil fuels in the years to come.
b) forget about tax cuts or increases in current spending, they won’t do any good anyway and just add more and more to national (mine and yours) debt
c) and go sustainable ( meaning: if you can't continue doing the same thing for say 100 years without damage, then its not sustainable)
Look at www.transitionnc.org/?q=node/73 for much more info.
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A great piece Robert.
Thanks for telling the truth all year instead of attempting to spin away what will be a nightmare 2009.
At least millions of people have now had some time to put their finances in order and stop overspending. This will make the difference between going under or not in many cases.
I also agree with you about Sterling. It is for this reason the government has gone quiet about saving everybody and peoples jobs. They know they cannot.
HBOS alone needs £200bn over the next 18 months to refinance its mortgage book.
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What a mess!
I worked in Banking from the 60's to the end of the 80's, and in those days Banks, when considering lending, used CCC (Character, Capability, Capital) or PARTS (Purpose, Amount, Repayment, Time, Security). Then this went out of the wiindow with selling loans to all and sundry, and it became you may not want it but we insist on giving it - lets continue to roll up your debts! Let's not forget all those letters from credit card companies insisting on giving out large limits, as long as you could sign your name on an application form.
I have a feeling that this Country will not pass these two simple tests now, and we will all in the workhouse!
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As an engineer I find this very worrying.
The Treasury and the City have put a huge amount of effort into deindustrialising the UK - not supporting tech companies properly, selling off companies to overseas buyers etc - but have got away with it in the eyes of the uneducated masses by claiming that it's all down to the market and of course ownership isn't important anyway.
Now that the lines between the Treasury and the City have become even more blurred and are essentially one entity then deindustrialisation could accelerate.
What can we do about this Robert?
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As I've said before, the UK's economic depression is likely to become a clinical one.
If it isn't already !
The only good news I can think of for 2009 is, er, um, er....
I can't think of any actually.
Suggestions anybody ?
PLEASE !!!!!
Before I top myself...
How about a New Years Resolution, Robert. To write about some good news in the economy at least every other day ?
There's got to be some out there.
Hasn't there ?!!!
If some good news (n.b. not spin) is broadcast regularly on the BBC, we might all start to feel better, spend a bit more and pull ourselves out of this depression...
That could be all it requires. A Reporter who's clearly got the ear of the nation to start reporting a few genuine good news stories. I don't mean that you should cover up the bad news, scandals and controversies as they should still be reported, but also seek out and report the postive, optimistic, good news stories...
If Gordon Brown is no longer admitting to saving the World, perhaps Bob Peston will...
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24. At 09:56am on 24 Dec 2008, TransitionPaul wrote:
The only solutions I can think of are
a) hyperinflation to degrade the whole of that debt (following Zimbabwe)or
b) legal cancellation of all derivative contracts (!!) or
c) collapse of the whole financial system incl just about all banks, and starting all over again.
+
I propose we proceed with all 3 solutions outlined above in the same sequence
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We might be headed for deflation in the short term, but only a massive and lengthy bout of inflation will reduce this huge debt... and that's bad news for us pensioners with no debt and a few quid in the bank. Back to the 70s? As Robert said some weeks ago: we'll all be impoverished. Happy New Year!
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Ten wishes for 2009:
1. Peston/BBC do some "business" reports on how small and medium sized businesses are coping with bad debts, reduced credit lines, falling order books and redundancies. You know those places where "hard working families everywhere" actually work.
2. Gordon Brown admits his role in the crisis (what crisis??). He cannot claim 9 years of growth, only dicate the year of the crash as being "global issues". Admit it was a lot his fault, and he will have many more supporers.
3. Vince Cable to sensationally defect to the Tories, to replace George Snob-bourne. An eminently nice bloke who talks in plain English, and looks like you dad. They can then hopefully create a new economic way to offer (some/any) credible alternative.
4. Bankers own up to their role, then repay some tax payers money by repaying their bonusses and ill gotten gains. Banks then focus on keeping depoists safe to reward savers, and prudently lending to real people for real things, with adequate cover. Oh, and we all be nice to the staff on the counters . . it's not their fault.
5. A moratorium on reposessions, until the banks have a clear policy. This should be matched by a moratorium on IVA's and personal bankruptcy, to stop people copping out from their responsibilities.
6. That the British Public makes it their duty to become informed on the effect of all the changes on their lives, so when that marvellous thing called Democracy kicks in and they wield their vote each soon, they choose on the basis of knowledge, not tabloid/BBC headlines.
7. Invest in British manufacturing - innovation, productivity and quality craftmanship. There is no point in a Buy British campaign, if we don't make or do anything anymore.
8. Widen the debate beyond the "new economy" to other related issues to the society we want for the next 30 years. What is our energy policy?? How will we use town centre shops lying empty, as the world moves online? Debate immigration and economic migration separately - what do we want and need??
9. Alexander Curzon to replace Lord Mandelson as MINISTER FOR BUSINESS
10. Over the next few days we can all appreciate those things in life which are free - our health; our families and children; our marvllous parks and countryside; the laughter and Company of friends - and take time to reflct that, despite how bad things will get, where our priorities do lie.
Merry Christmas all. Keep smiling.
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A Marxist analysis (Part 4):
http://www.wsws.org/articles/2008/dec2008/nbe4-d23.shtml
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when are the banks going to be forced to come clean and disclose their toxic debt? i suppose GB did due diligence before bailing them out so he knows what they are, as (forced)shareholders we also should be told....
when are the big four auditors going to be brought to book? They signed off the accounts of all these companies..........
when will it dawn on GB that borrowing to pay ones debts is the road to ruin....
When will BBC journalists (inter alia) start to hold these failed bankers and politicians to account and demand answers to pertinent questions.......
when will disaster really hit home owners as they realise those endowment mortgages wont pay off the mortgage.......and GB has vaporised your pension....welcome to retirement on benefits..........
Apart from that may i wish one and all a very happy christmas and a healthy 2009
it will be interesting reading robert's blogs this time next year and see who was right!
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The image that best sums up the govenment's actions is of a losing gambler doubling his bets. Unfortunately, the amount of OUR MONEY that GB/AD have on the table is literally unimaginable, and unless some things start to go right very soon, our collective debts will become too big to ever pay back.
And no 5 is right, there are no exceptional bankers, just well-connected individuals who happened to be in the right place at the right time. The salaries they command are just rent-seeking, not earned wealth.
As for the future of the pound, well who knows? Certainly Britain is in deep trouble, but the major exporting countries are faring no better. This really is a world depression that we are entering and the real dangers are not a few redundancies but civil unrest in this and other countries, and armed conflict between countries.
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Thanks Robert for your analysis over the last 12 months. You really are a good reporter.
And thanks Gordon. Your achievements were greater. You achieved power, bankrupting the country in the process. You really will be remembered. Why did Tony not go earlier?
Say goodbye to your savings.
Merry Christmas.
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Quote:....."In an extreme and highly unlikely case, if the markets viewed our banks as recklessly managed basket-cases, that would have an impact on the value of sterling and on the ability of the government itself to borrow."
As pointed out previously in these blog comments, the risk of default by HM Government is priced much higher in the markets than that of McDonalds (of the red-nosed clown fame) !!!!
This is where, Robert, you are selling the UK's people down the river by stating that all will probably be OK, and the government is in control. By not taking decisive action now, in a few months (maybe 6, maybe 26), Britain will fail and be bankrupted, and all hell may break lose !!
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It's a Mad Birthday World (yes, it's my birthday today)
Lending to banks, reluctantly, yes. I can see there would have been anarchy on the streets if HBOS had gone down, taking 22 million accounts with it.
But lending to car makers? As others have pointed out, no one is lending taxpayers money to the construction industry, much less to hard hit estate agents. I would argue that car makers actually have the least good case of all.
The steady drip drip of the environmentalists arguments about cars, coupled with the sudden oil price shock last summer have, I believe, changed the world forever when it comes to motoring. I can scarely believed that once I thought it essential to trade up every five years max to a new car. The one I have now is six years old and will do me for as long as it can still get from A to B and until there is a new cheap hybrid or oil free form of vehicle on the market. Until then , for this city dweller, there's public transport.
I know this is not possible for people who are not city centre dwellers, but if even a small proportion of people see things as I do, then those vast acres of unsold cars will remain unsold and gvt loans will merely result in more acres of rusting unwanted vehicles joining them month by month. (Back in the USSR!)
I appreciate it must be hreatbreakng and difficult for people whose livelihoods depend on the motor industry. As it was for miners in the 80s. But surely for the country as a whole it is cheaper and more sensible to concentrate on benefits and retraining for the workers and stop expecting the world to resume after a brief hiatus and it once was.
But I guess there's too many votes in the motor industry in the Midlands for such a sensible course of action. I expect the announcement that Tata are 'pumping millions into Jaguar' is just to soften us up for the millions we taxpayers are going to be pouring in.
And so the Madness continues. Happy Christmas
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You know when things are bad when Governments stop looking for countries to invade and start giving dates for when the troops are coming home.
Governments understand Marshal Law and when it will be needed.
The 2nd greatest Superpower on earth as recognised by each and every government on this planet as being its own population. When they get piss*d, and they are going to get really piss*d, then governments need to start preparing for great social upset.
When the lights go out, the fuel become too expensive, the social dole is empty, rubbish is failing to be cleared, we may then see real change. So if all the people here on this blog wonder why the governments of the world are borrowing more and more money to get deeper and deeper into debt, then you have your answer. Fear.
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Robert - How dare you - The spell checker on this blog is American
Color or Colour - guess which word has the red line under it.
This is the BBC, isn't it?
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Quote: "First, an economic recovery rests on the ability of banks to support viable businesses during what increasingly looks like a severe recession."
No, there is little, if no, chance of an economic recovery based on resuscitating the banks. When this banal dream does not work it will just bankrupt and enslave our children and grand-children with its debt to foreigners.
Pain now, by making sure the insolvent losses of the banks are not transferred to the UK Government, would lead to Britain losing its ability to pay for imports, six to twelve months of unrest, but thereafter a rebuilding and growing and strong Britain that will build itself back into the world player it is.
But Gordon Brown doesn't want that, and would rather let his dangerously acute appendix rumble and worry about it bursting later, than operate and deal with it now.
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Looks like war with doom, gloom and the rise of the anti-christ to me. Isn't life fun and a Merry Christmas to you all.
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UKFI may well have a crucial role in the unfolding of the issues of credit and financial stability but there is still little sign the Government understand the depth and magnitude of the economic crisis.
There is no sign that they are prepared to take the powers that are available through ownership and statute.
This is a government that has out laissez faired Thatcher but is in denial on the analysis of the outcome.
It amounts to a form of worship by Brown (and earlier Blair) of all things private sector and privatised in spite of most of the woes of the government having their pathology in a wholly out of date micro view of free enterprise and 'free' markets.
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It is critical that sound money** is re-established. Without sound money we will have neither credit in the World nor in the Country.
The Bank of England and the Treasury must cease destroying the value of money (and the currency) We, as a Nation, are talking rot when we seek to prevent other countries engaging in competitive protectionist policies when that is exactly the policy of the British Government through continued devaluation of sterling.
Those who ran, and still run, the Bank, the Treasury, the FSA who ran this country into the sand must go.
** sound money means that borrowers should expect to pay a fair price for the money they borrow and savers and investors should expect a fair return - zero, or effective negative, interest rates are NOT compatible with a functioning economy or sound money. (Fair = 6 to 8 percent.) Must happen by June 2009!!!
Merry Christmas and a Prosperous New Year to all. (Well not too frugal anyway!)
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I think it is a bit silly to keep criticising Gordon Brown. He is in charge because he knows a lot more about what to do with money and stuff than any of you people. If you knew about money and stuff you would not just write on the blog all day.
And what about Peston - nobody had heard of him until the credit crunchy. Maybe you should think about the coincidence of him appearing and then everything going wrong. Perhaps if he wasn't in all the media all the time telling people how terrible everything is then things might not be so bad.
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The one truth you should have emphasised a bit more, is that banks must lend to " Viable ' businesses ; a bit more emphasis on" viable "wouldn't go amiss . Lending to failing business is a definite no-no. Merry Christmas, :: we'll get back to constructive demolition of Nu Lab after New Year.
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This comment was removed because the moderators found it broke the House Rules.
Quote:.... "the Treasury will announce details of yet more taxpayer lending, this time to ensure that credit is provided to viable and strategically important companies - such as the more efficient carmakers."
In an economy where there are hundreds of thousands of new cars without any buyers, and more being added to unsalable inventory every day, no car maker is efficient !!
And with the UK's car plants being older and less technologically efficient than the newer Eastern European plants (where labour costs are anyway much lower), UK's car plants can never be efficient at present. Robert, you are being mischievous.
Best bet is to mothball car plants for two years, and then begin them again when they are purchased out of bankruptcy/insolvency.
You have a two year skill-drain in the meantime, but this is surely the least-bad option.
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#44 - Yes let us all believe that if you put your head in the sand, then the bogey man will disapear. Or better still, let us all close our eyes and wish it all better.
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HOW TO BE HAPPY
1 Need little
2 Want less
3 Envy no-one
4 Owe nothing
5 Walk on the sunny side of the street
Forever Young (apols to Bob Dylan 1974)
May you always be courageous
May your feet be ever swift
May you have a strong foundation when the sands of time do shift
May your heart be always joyful
May your song be always sung
May you stay forever young.
and a very Happy Christmas to you all from me and him outdoors
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With the economy, we seem to be witnessing something akin to 9/11 - the pillars of the economy have been struck by 747s, fires are breaking out everywhere, and the firemen have rushed in to save the situation.
What we don't dare to acknowledge is that any minute now, and with very little warning, the whole infrastructure is going to collapse in a pile of dust and rubble.
From Ground Zero, we will then see the emergence of New Capitalism.
Isn't it time to start devoting our attention to what that will look like? My prediction is that the building blocks of the New Economy will be, not institutions, but empowered individuals armed with laptops and a connection to the internet, collaborating in virtual teams, and building the virtual corporations of the New Economy. Not such a bad future!
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#16 Re the panto season. It's well worth looking at Tim Harford's cautionary tale of [Unsuitable/Broken URL removed by Moderator] on the FT website.
Re Robert's blog. I'd like to say something optimistic on Christmas Eve, but it's difficult. It seems to me that the banks' once private debt, has become de-facto sovereign debt. Which means that the rest of the economy is going to be subordinate to the banks for the forseeable future, and not the other way round as it should be.
The real economy should come first, even if that means banks in administration.
Rebuild Britain 2010
This is the second version of the draft website - a bit less offensive. It is only a draft. To participate, join us.
And think - as Christmas is effectively a rebranded winter solstice festival:
Darkness shall give way to the Light! - but only if we make it do so, metaphorically speaking.
Merry Chrimbo everyone! Look after your loved ones.
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We enjoy your 'well-informed' predictions, Robert: keep them up.
Time for everyone else to have a go ! Merry Xmas
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Cheer up 'everyone in the West' you could have been born Zimbabwean! Perspective is everything, lets rebuild a more fair and sustainable society. Stop worrying about your losses or your future and send some hope from what you have left to those less fortunate than you.
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#44. bobgateaux wrote:
If you knew about money and stuff you would not just write on the blog all day
Bob,
Would it not be wonderful if life was that simple...
The people who run things self select like minded people who will massage their egos and accept the model that their view of the system has created - those of us who oppose, or even deviate marginally from the accepted orthodoxy of such a model were weeded out in the selection process long ago. Just try getting yourself into any British political party - there is nothing more spiteful or closed than a constituency party selection committee!
On the subject of making money: my guess is that most of the blog participants here have sufficient funds to meet their needs and the time to spare to indulge their mostly altruistic desire to make things better for their fellow man. Otherwise why would most offer a practical critique of affairs?
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#44 If you knew about money and stuff you would not just write on the blog all day.
...has it not occurred to you that i have time to blog because i retired as a wealthy man after selling my business and shares at the top of the market.........i have more real experience than GB and the government put together.
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I was expecting at least a "Merry Christmas" to the 600k readers of this blog, RP! Last year you did a song and apologised for being miserable!
By the way, I got that number from your Panorama - Astounding!
It's my last morning of work today, so Merry Christmas Robert, supercalmdown, alexander curzon, javaman, kikidread, etc!
ps Just started reading Who Runs Britain - Very good, but shouldn't the 11th word of the very 1st sentence be "the"?
Happy holidays and see you all in 2009!
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Can the next 18 months be about not listening you to creating self fulfilling prophecies-and creating your own wealth of the back of the misfortune of others
Have A Good Peaceful Christmas
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*24 TransitionPaul
In relation to your post
I have been invited by the conservative party
-You are invited to the Conservative Party Keep Britain Working Event to be held on Tuesday 6th January 2009 in Ipswich.
The aim of the event is to share with you the latest thinking from the Conservative Party about the current economic downturn and to hear your views about measures that could be taken to alleviate the challenges we face.
The forum will be led by Andrew Lansley MP and will include business representative groups and businesses, local authority representatives, voluntary sector organisations working with business, the self employed and unemployed.-
Solutions to alleviate the challenges we face has already been exposed and debated since Jimmy Carter. I am afraid that the future under the so called leadership of the conservative party looks as bleak as the actual present ruling party.
“Where there is no vision, people perish”
As president, Carter created two new cabinet-level departments: the Department of Energy and the Department of Education. He established a national energy policy that included conservation, price control, and new technology. Foreign oil imports were reduced by 50% from 1977 to 1982.
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A Marxist analysis (Part 5):
http://www.wsws.org/articles/2008/dec2008/nbe5-d24.shtml
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Well I think it's time to start putting together a list of 'Who is going to the wall first' next year.
I propose (in numerical order)
1. Bank CEO's
2. The Treasury
3. The Government
4. Anyone claiming to be an 'economist'
5. The media
6. The media again
7. Any other capitlaist.
Just to clarify, by 'going to the wall' - I don't mean going bust!
I have made a pledge that when the revolution comes I will hand over my worldly goods to the revolutionists in exchange for my life.
I suggest the rest of you do the same.
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In all of these blogs there is an unquestionned assumption that after an hiatus of say two years, the economy will begin to revert to its previous size. This seems to me to be a false assumption.
It may be that the credit bubble over the last decade accounted for as much as 20% of the world economy. This credit, in fact, just didn't exist at all. It was fantasy credit based on fantasy investments and gave an impression of a much larger global economy than was actually the case. So the idea of a recovery is surely a myth. What will happen is that the economy will shrink say by 20% (if we are lucky) and stay there i.e. that will be its proper size.
We need to accept this and take the medicine now... not create more fantasy credit and start the process all over again.
So the Government's 'hair of the dog' response is delusional and immoral. It is based on an inability to face reality and a selfish urge to get future generations to bale out our greedy lifestyles today. I for one think too much of my children and grandchildren to sign up to this 'greed on greed' approach.
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#50 - Yes - great idea - I'll just stop a moment to put a virtual log on my virtual fire and take a bite from my virtual food and continue living my virtual life while in my real life I get on with keeping myself warm, fed and earning a real living doing real things.
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As an ex-military man I learned that the first principle of war is "selection and maintenance of the aim". Selecting the right aim (or mission) is critical. If the mission is clear, your chances of success are raised; if the mission is ambiguous, you're stuffed from the start.
The UKFI's mission is ambiguous; it will fail.
The UKFI can't simultaneously "create value" (that means taking risks to achieve rewards), "protect value" (that means avoiding risks to, er, protect the extant value) and "provide competitively priced loans" (that means shifting between risk-taking and risk-aversion, depending on market forces at the time).
So, here we go then as the politicians assume leadership of the banking system - a group of people never reknowned for their clarity of purpose ("selection of the aim"), steadfast approach to challenges ("maintenance of the aim") or commercial acumen (risible).
Gordon Brown (self-proclaimed saviour of the world) starts by coming up with a woolly mission for the UKFI, thereby guaranteeing that it's downhill all the way from here. Unlike you Mr Peston, my money is on "the markets [viewing] our banks as recklessly managed basket cases" in the fullness of time. It's not "if" the markets will crucify the UK, it's "when". My forecast is before the end of 2009. We're already witnessing a slow-motion run on the pound.
Forget party political ideologies, manifestos and general elections. Put simply, I'm just getting really, really angry at all this stuff: the near-criminal incompetence of our political elite (all parties are failing us badly) is now becoming a serious threat to our way of life here.
Where's our latter day version of Winston Churchill for goodness sake? Whoever you are, you'd better stand up and make yourself known pretty soon.
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When does UKFI become a Sovereign Wealth Fund?
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Trust has gone!
That's the problem, and I don't see how it can be restored easily. With very difficult times ahead, it will be unlikely that the hard decisions that need to be taken will be accepted by everyone.
And, if we are now the banks, that's a recipe for disaster before UKFI even begins!
Every GBP that's spent on regaining a sound economy will be contentious unless we have some trust in the system.
This is a problem that cannot be resolved by the usual spin or the giant fist or even a change in government. We are at the end of an era.
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I'd like to ask the government what it is doing for its customers (i.e. the people) when it comes to providing the right to participate in decisions that affect our future?
Did we get to choose becoming "shareholders" of the banks? Isn't a share something that i) potentially pays dividends ii) can be sold at a profit if its value increases iii) provides the right to participate in decisions of the entity that issued the shares?
Mr Brown, can I sell my shares please? I'd like to invest in something with a future.
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# 50 Michael Wolff
Nothing personal (I deplore rudeness), but your post is tosh I'm afraid.
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"It means that if the perceived credit-worthiness of our banks - with their trillions of pounds of assets and liabilities - were to deteriorate further, that would have an impact on the perceived credit-worthiness of the state."
One step to take to improve the perception would be for the government to ensure the removal of all the fat cats at NR, TSB/HBOS, RBS and BB. Thereby sending a clear signal that those responsible cannot do it again.
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To resolve the current credit/banking crisis with require one or both of the following; the banks acknowledging that they have findamentally moved away from providing a secure haven for investment, and possibly a greater "nationalisation" of our banks. The Northern Rock and the Halifax Building Societies used to be watchword for northern pragmatism and common sense....
The banks have targeted profit above all else in recent years (so has the Building Society I work for!) with a culture and reward system which has reduced the accountability of decision makers. Short term gain has has created institutionalised "Ponzi Schemes" forever trying to keep up with the Jonses so as to not be left behind.....
It is amazing how many unbroken things are currently being fixed because they are not whizzy enough....
ALL of the credit crunch risks were identified many years ago (at least 6 from where I sit) but nobody wanted to be left behind in the good times.
Much as I have enjoyed Robert's articles this year they have not probed deeply enough. Many of the reactionary decisions now being made to protect lending positions were identified at least 12 months previously but not acted upon.
That is the question that should be asked - why??
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#52 - you just don't get it. we're currently at a critical stage in the latest technological revolution - IT and telecommunications.
We haven't begun to realise the full potential. This economic wipe-out will clear the way for its full fruition, in the same way that 1929 cleared the way for the car and plane driven economy, that is now about to collapse.
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Re no 60: In ordinary times it should be the politicians who are first in the queue for re-education when the enraged mob has broken through the last cordon of anti-terrorist police around the Westminster bubble, and the ropes are being flung over trees and lamposts. But I've come to agree with you that bankers are even more deserving of revolutionary justice than govt ministers and their assorted hangers on the press and civil service.
More seriously, let's just pray that in 2009 these people realise just how isolated their lives are, insulated by the bubble of power from ordinary folk, and that they acquire some understanding of just how hated and despised they have become.
Merry Christmas.
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I have never seen such a collection of uneducated drivel as is found on this comments page. From the marxists/socialists proclaiming the end of capitalism to the tin-foil hatted innumerates who obviously have no idea of accounting/finance.
It is quite amusing though - a bit like going to the zoo
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experts had been warning (i.e. banging on) about bad investmenting in the market in CD's and similar asset types such as derivatives etc.
"Music, games and DVD chain Zavvi has gone into administration, Ernst & Young has announced, threatening 2,500 jobs."
Same thing happened with tower records
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#39. there is no spell checker on this blog. there may well be one on your browser though.
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Merry Christmas Robert, you have done a fantastic job this year.
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How our banks were rescued!?! Indeed!
Shouldn’t that programme be re-titled “How our banks were granted a temporary respite”?
The arrogance of Alistair Darling and the smugness of Gordon Brown will be wiped away in 2009.
Our analysis is once again showing that stock markets are set to plummet at least another 50% next year, as yet more banking woes are unveiled and major corporations fail.
Let’s hope that it’s not just glib sound bites and the money printing press that the government have left in their armory, or else God help us one and all!
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Robert,
When are you going to be allowed by the BBC to directly blame Gordon Brown for creating this UK crisis by artificially increasing the money supply which created this bubble with his huge public sector borrowing over the last few years?
This allongside changing bank regulations allowing them to become reliant on wholesale borrowing above their deposit levels plus a whole range of socialist policies.
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I would take issue with the idea that the main reason some companies has gone bust is the withdrawal of credit. The main reason is that the companies have not been well managed and their finances were not robust. The credit crunch has played its part, but for every company that has gone bust there are companies who can still get credit. The difference between those companies is leverage, earnings prospects, assets values and other management controlled criteria. If all companies had made contingency plans for a severe downturn then none would have gone bust.
I would take issue with the idea that UKFI's aim is to make sure banks we own provide competitively priced loans to small businesses and homeowners at 2007 levels. The evidence is that Northern Rock and Bradford and Bingley are the worst banks for withdrawing credit. They are being run with the aim of minimising the loss to the taxpayer. The two banks who have announced significant actions to increase lending to small businesses are HSBC and Barclays. How ironic that the one thing the government turns out to be ruthlessly efficient at is banking. The UKFI’s dual aims doom it to failure on at least one aim. Either it makes big losses for the tax payer or it restricts lending to businesses. Off course the government can do nothing about the likes of GMAC and GE Money which are American lenders withdrawing credit, and these were very active in the Car loan, electrical loan and unsecured loan arenas. The UK/ Irish parts of these companies are the ones who should have been nationalised.
Saying that credit will be provided to strategically important companies - such as the more efficient carmakers seems unlikely. The UK government seems unlikely to lend money to Nissan, Honda, Ford and BMW, but to less efficient carmakers like land rover jaguar and Vauxhall. This would clearly be anti competitive and Nissan, Honda, Ford and BMW would have every right to close their factories in the UK. Any strategy should be aimed at car manufacturing as a whole in the UK not just those that beg loudest. A good start may be to sort out car loan availability, but also tax incentives to stay in Britain and providing sponsoring for green technologies. Blanket loans just create moral hazard with companies returning for more and continuing to be run on the basis that the government is always there to bail them out.
Now we come to the rather horrifying thought that the line between private sector and public sector is blurring. Considering how bad the government is at running most things this is worrying, except of course being ruthless efficient at withdrawal credit as bankers. We already know some of the problems that are going to come up in 2009 that will hit the banks. Housing will fall another 10 percent minimum( more like 20 if you believe some), credit card loans will start to default expecially after Christmas, car loans will start to default as people are stuck with loans greater than the value of their cars, the big thing to hit banks of course will be commercial property values dropping by up to 50 percent. The fall in commercial property hits companies ability to lend, hits banks profits, hits pensions and because of the way the government calculates GDP and its balance sheet, the government will go a lot more into the red. We all know it is coming, we know it is bigger than problems caused by housing and possibly the credit crunch so far and yet there appears to be no semblance of a plan to deal with this.
As to whether the fates on the banks are linked to the government then some how I doubt it. All those big investments in new shopping malls which will become empty will come back to the banks, but most of that will be hedged. Proper hedging is why the banks will most probably survive while the UK treasury will fail much worse as it takes on the full impact of the downturn.A sterling fall and currency revaluation seems likely at this point, along with the government being forced to start to balance its books properly by external investors.
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# 61 chiefexec
Yup, that's right.
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#44 bobgateaux:
"I think it is a bit silly to keep criticising Gordon Brown. He is in charge because he knows a lot more about what to do with money and stuff than any of you people. If you knew about money and stuff you would not just write on the blog all day."
What Gordon Brown knows a lot more about than the people on this blog is getting into power and doing everything he can to hold on to it. Whether he knows more about money then becomes irrelevant because his priority is to maintain his grip on power. Providing the best solution for the country's financial ills comes a long way second, if it is considered at all.
All those in politics: the government, the opposition, the press and the financial institutions have all sought to play down the seriousness of the situation, ostensibly to avoid talking things down and thus making things worse. However it is clear that at each stage the comments and forecasts they make are getting worse: we've gone from a possible recession to a short recession to a rather deeper recession and now Robert's saying it may be a "severe recession". So what is important is what they are doing rather than what they are saying.
I'm not looking for Darling to say it is going to be severe, but we should be seeing government action that appreciates that it's going to be very bad, rather than short term measures to paper over the cracks. That's why holding on to the 12 Billion pounds for the VAT cut would have been better so that they had some reserves for helping out those who lose their jobs and hard-pressed pensioners who are losing their savings a little further down the line.
Gordon Brown has the potential to become the most reviled PM in history, so you won't think about Neville Chamberlain "Peace for our time", you will think "We're helping hard-working families".
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As far as I can see, its as simple as this!
The banks and the government are to blame for this ridiculous mess!
When I purchased my house 10 yrs ago, the mortgage was based entirely on 3 times my anual income. ( the bank even called me to tell me there was a shortfall of £300 to purchase the mortgage ).
Could you imagine that happening two years ago??!!
If the banks had stuck to these principles, then we still be prospering today...
1. If you could not afford a mortgage, then so be it.
2. This would then have prevented house prices increasing to the most ridiculous prices known!
But because the banks started to lend money...willy nilly... then this just inflated house prices!!
Merry Christmas Everybody!!
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# 72 dmjeffrey
So what's your (constructive) contribution exactly? Please enlighten us.
And that's me signing off for now. Merry Christmas to all, and may you have an interesting 2009!
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Mr Peston - will you please make your New Year resolution to stop talking all this doom and gloom all the time? You are not helping matters. Just leave the experts to get on with sorting things out.
I do not uinderstand why you are on the telly and on the web sites all the time and talking nothing but doom.
And why do you always report things in a way that suggests you are really clever and knew all along what would happen - if you know all about everything why don't you tell us beforehand what is going to happen? That way we could make things better.
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Let me see if I've got this right, we are screwed!
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4,
very true, very scary - In fact I'd say hairy (where is he, he used to post on here all the time)
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Those with any sense are now trying to liquidate all their assets and use the cash raised to purchase a smallholding with a small amount of livestock and a generator capable of running on used cooking oil.
There will be no recovery from this in our generation...the wheels on the rollercoaster are only just starting to twitch, wait until they really start to move and watch the plummet into full scale financial anarchy.
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2009 will see the new reality unfold. It's going to be very bloody. But with a sense of black humour, we can watch as the rest of the developed world - particularly Europe finds that the total value of corporate debt due plunges their economies even further down than the UK already is.
Strangely, we will not see a massive run on the pound. The US dollar will shrink at an even faster rate and the Euro will probably crack as the individual economies panic under the pressure.
Having said that, we will not just face economic pressure. There is a very strong likelyhood of social unrest.
So enjoy Christmas and New Year we will need the memories to sustain us next year.
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I disagree, it is not about the banks at all.
Peston, your monolithic view of a centralised economy is a throwback to the corporate 1970s.
Then again, we have a government resurrecting the zombie economic policies of that era.
The inescapable fact is free market economies are built on billions of everyday micro-economic decision made by the population.
Banks only figure in some of decisions. However, to procure services or spend earnings figure in the majority.
The propensity to spend is always much, much lower in a recession.
What 2009 will be about is SME's trying to keep afloat. 50% of our GDP is created by SMEs. There is evidence already that SME's with capacity and orders are turning down work because they can't extend credit terms.
Expect 2009 to be about loan guarantees for SMEs, calls for a bonfire of small business red tape and pressure to reduce SME corporation taxes.
The banks in 2009 will do the economically prudent thing and repair balance sheets. Incentives to encourage saving and also re-pay the government loans as quickly as possible will not create 'cheap credit'. Quite the opposite.
Those banks that were sensible during the credit boom madness will mop up the demand for credit and take market share. However, with the risks of default (through unemployment), lending rates will reflect this.
Consumers will still feel the pinch and still HAVE NO CONFIDENCE, consumer spending will stagnate and unemployment will continue to rise. Consumers will exercise financial prudence, favouring to repay debt rather than spend.
Until a government is installed with a strong policy on sound money, fiscal and monetary responsibility, the public will not feel the compunction to spend their earnings.
The good news is that the banks cannot lose.
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88. At 11:33am on 24 Dec 2008, PhaetonFlanFlinger wrote:
What 2009 will be about is SME's trying to keep afloat. 50% of our GDP is created by SMEs. There is evidence already that SME's with capacity and orders are turning down work because they can't extend credit terms.
Please clarify your acronyms
SME=Subject Matter Experts?
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On the subjects raised by comment no. 31, 'When democracy kicks in...' and comment no. 50, ‘The new economy’.
Democracy could be so much more than what it is now. Here’s just a few examples. ..
i) Rather than just getting one choice, we could be given many.
ii) We could choose the policies we want.
iii) We could choose from more than just a handful of parties, and we can make this choice whenever we want.
iv) The government could treat its citizens as customers, and realise that listening to customers makes you successful.
v) The customers are also shareholders, so get to choose how the government is run.
vi) The government encourages its customers to participate in decision making.
vii) The government is accountable to its customers for fulfilling the commitments it makes to them.
viii) The government measures its success by tracking against targets. When something is off target, it proposes steps to rectify rather than just lay blame.
Doesn’t this sound a bit like what happens in a free market economy? You know, the one our so called democratic governments interfere with, but don’t let us choose if or how?
Granted, it is a bit more complex than this. But to make things better, shouldn’t we have an idea of what success looks like?
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We cannot be the only household planning to put savings into National Savings. There must be quite a lot of money out there looking for a 'safe' home. Can this money not then be put to work improving national infrastructure and rebuilding the economy?
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I think we can comfortably change the year or two to 10years or so.....
AT LEAST !!!
We are a laughing stock and yet our leaders still claim its someone elses fault.
Could you have a review of which banks/building societies are worthy of us investing money in ???
Or do we have to take gambles ourselves to try and find a return worth calling that for our savings.
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Robert, Have you ever given thought to your involvement in all of this. Your constant doom and gloom stories have certainly spread a real feeling of fear into the business community. Should should take a good hard look at yourself and the problems you have and are still causing. I hope you have a great holiday thinking about the lives you have effected.
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SME = Small / Medium Enterprises
What use is national or any other savings when cash is worthless ?
Hard tangible assets are the only thing worth having, and when there is nothing to be had then assets that enable you to survive are the only ones worth having.
You don't have to look far (Zimbabwe) to see a nation with worthless cash in action.
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Small Medium Enterprise.
http://en.wikipedia.org/wiki/SME
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This whole current financial problem could be solved if all the city bonuses of the last ten years were paid back. All it would take is for the US and UK governments to agree on a repayment strategy. The masses are getting agitated by the fact that a few people have caused all this mess and are getting away with it.
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keep telling it like it is Mr Peston.
Merry xmas!
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#91 czetkin
I wonder what would happen when you want to withdraw your savings. Would someone tell you that you had payed for a three metre length of a new railway line and you could use it whenever you wished?
Merry Xmas!
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72. DMJeffery: I have never seen such a collection of uneducated drivel as is found on this comments page. From the marxists/socialists proclaiming the end of capitalism to the tin-foil hatted innumerates who obviously have no idea of accounting/finance.-
Presumably you mean, not like those mathematical geniuses who currently inhabit the city, working diligently and bravely in our world-respected and cherished banks, hedge funds and financial institutions. They're all good with numbers aren't they? And they've done such a terribly good job of running the economy this year as well.
Hopefully they'll all get their bonuses.
Heaven knows, they deserve them!
As if.
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Post 89,
SME = Small to Medium Enterprise.
In plain old fashioned language a small to medium sized business. Generally employing between 5 and 50 people.
I wonder how many of the bloggers here have also read the following news story from this site
http://news.bbc.co.uk/1/hi/business/7791234.stm
It appears the UK taxpayer now indirectly owns Formula 1 as CVC who own the rights have borrowed the money to pay Bernie Ecclestone for them from RBS. The way things are going with Formula 1 with Honda pulling out the UK taxpayer could be looking at a big loss on this investment.
We can add to this the GBP 200 million that RBS lent the Americans to buy Liverpool FC which it seems highly unlikely they can pay back anytime soon.
Looks like the UK taxpayer will soon be a big player in World sport.
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Fairly meaningless title and article Robert. The banks deserve to lose, the whole system needs taking out.
As someone remarked yesterday, it is impossible to 'create wealth' as there is a certain amount. It is the distribution that can be altered. Similarly with power. Unfortunately 'we' have a situation where our Prime Minister slipped in through the back door, his new best friend Mandelson did too, the banks have shafted us all right, left and centre and the despite 'us' owning various percentages of various banks the reality is that we will have little say over how any policies are implemented.
The main problem is that democracy does not really seem to work - we need a form of meritocracy in which experts are given suitable levels of power to make changes for the benfit of all of us, rather than us having to liten to Branson mutter on about the NHS, a topic he is not qualified to comment on , except down the pub.
At present however, rather worringly, it does seem that the average 'man on the street' does see things in a more sensible way than the majority of those 'at the top'. Even this BBC 'Have your say' is an entire waste of time because people can comment all they like without the faintest chance of anyone taking onboard their comments. A good way to let of steam, perhaps, like going to watch the football and drinking until you collapse. Which actually seems like a great idea given the garbage that the BBC pedalls at present. Like Alan Partridge once said 'People like them, let's make some more of them!' Terrible Philosophy. Lowest Common Denominator, let the thickest lead! People want to hear about Peston's haircut, let's tell them about it, it's really important, because importance is determined by how many idiots might be interested.
But the truth is, nobody gives a damn - the corporations are the new government and those most responsible for recent problems are insulated enough to weather any storm. I personally hope the problems are a big as possible, with all these rotten swines crumbling and that we can rebuild a better country in which to live.
It would be interesting to hear what the aim of the government actually is. Creating wealth is an illusion, as is much of the economy (i.e the huge portion not even known as the 'real economy'). In this global situation, is the aim to end up with one global currency? And is it really a good use of time for a huge number of people to spend decades sat in an office alphabeticizing sheets of paper? No wonder so many people are depressed.
We do not own the banks - they own us and unless they all collapse we will be at their bec and call permanently.
Labour have convinced people of the idea that it is normal to leave school/college owing these organisations huge amounts of money. Many people I know would be happy just to get back to zero. They are talented, skilled people but they are unable to utilise that skill in Britain. It is not a place where young people can reach their potential, and this problem is doubled in size when we are all so financially crippled and have little chance of ever reaching a level of social mobility equivalent to our parents' generation.
How can I have anything but contempt for these organisations given that they will take all they can unless bullied by those with more power to be a bit 'nicer'. Those with the power in society can do no wrong. Those without are penalised on a daily basis.
The UK is a great place to live for young people at the moment - can't afford houses, have huge debts, graduates working in McDonalds etc etc.
Hopefully, 2009 will be utterly awful for businesses and then something better can be put in place in 2010 by some new people.
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95. At 11:51am on 24 Dec 2008, PhaetonFlanFlinger wrote:
Small Medium Enterprise.
OK, thats me excluded then
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#93 Robert, Have you ever given thought to your involvement in all of this..."
This is what I have been saying too. Mr Peston does not seem to know the difference between reporting the news and making the news.
His reporting style is very egocentric though (always "I can reveal" rather than "The BBC can reveal") so I guess he's actually pleased when people accuse him of having a part to play in the crisis.
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It's no use crying over spilt milk.
The damage has been done, we can't turn back the clock to the 90's to avert the problem we as individuals have all played a part in creating.
but maybe.. just maybe the next generation will learn from our mistakes and they will avoid the next cycle of boom and bust and realise that money does not grow on trees and that when you buy a property you must be able to afford it in good times and in the not so good times.
But I doubt it!
Have a great Christmas and may all your bills be small and more importantly I hope you have enough liquidity to pay them.
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37 wharfgirl - many happy returns of the day, another excellent post by the way.
In fact there is a high level of realism on this blog today as to where the country is and to where it is almost certainly heading. I reckon over 85% of posters talking much good sense, with Kikidread, Alex Curzon and even good old Duvinrouge providing regular laughs along the way.
Robert : you have done a fine job as messenger and certainly do not deserve shooting. However there are major omissions from your analysis as pointed out by many of the posters over last month or so. Is that because profound political, social and environmental issues are someone else's turf?
I am lucky enough to have been continously employed (bar 3 weeks) for the last 33 years and developed some sensible and, with hindsight, fortuitous habits (cycling, veg growing, banking with the Cooperative) but I fear for my children and my children's children because I cannot see calm and carefree times ahead for anyone in this country, let alone globally.
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Zavvi into Administration!!
Pity we cant put The Labour Party
into Administration.
No surprise though to see a
former Branson business fail
all fur coats no knickers. . .
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I have been an avid reader of Squeaky Boys Blog for some time, not for his views, I can get ADHD at the comprehensive up the road, but for the variety of responses, some informed whilst others merely opinionated, from you lot.
I should like to take this opportunity to wish you all Merry Xmas and advise you that I intend to be spouting my own two penneth on here during the new year.
For a start, in the words of Private Fraser
" We're all doomed ":-
We cannot afford to go on paying pensions for Civil Servants that retire at the age 50 then live to be 100.
We cannot afford to take on the pension liability for all the " Big " companies that are about to go bang.
We cannot afford to go " all in " on Gordy's one strategy of spending our way out of recession.
We cannot afford to take on the toxic debt created by our *ankers while they cut off funding to the small business sector.
There needs to be an outbreak of fairness, those that have pocketed the cash need to pay, the weak need to be protected from their Governments ineptitude, in short someone has to step up.
Vince Cable with full executive powers for ten years anybody ?
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And the good news is... good news, what's that?
It might be difficult to find any good news or even to find enthusiasm for 'The New Capitalism' (which is something we should all be getting excited about) when we are all staring at our navels contemplating catastrophe and being fed suicide prompting pieces every ten minutes on the 'Today' programme.
It would help matters a great deal if the media could desist from fanning the flames. Their contribution to the length and severity of the downturn should not be underestimated.
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"UKFI's primary aim is to...... provide "competitively priced" loans to small businesses and homeowners "at 2007 levels"
You are having a larf aren’t you Roberto?
I know property is only a part of the issue/cause of our problems, but as I see it the banks put in place a system only that worked when all the ‘ducks were in a line’ and would fail if conditions weren't perfect.
So I got a couple of issues:
1. As it was in the bank’s interest to have their assets valued greater than their liabilities, didn’t they have no option but to continue to drive house prices up? If so, was this a deliberate action or should we still believe it was a reaction to public demand? There is legislation in place to stop this sort of unnatural activity on the stock markets, so did the fraudsters in suits just move into property?
2. I may have this wrong, but is my hard earned tax money now going to be used to re-inflate the housing market so the banks books balance sooner rather than later? And doesn’t it seem somewhat ludicrous that we are spending this tax revenue (and future tax revenue) now with the sole intention of providing ourselves and our children with more expensive houses!
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dmJEFFERY post72
At least they all have a view unlike you,guess you are pleased
the country is as good as BUST.
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Robert
"As a nation, our fortunes in 2009 will be conspicuously tied to the fortunes of our banks as never before."
As never before ? Or should that be as we never before realised ?
Wasn't the behaviour of the banks over the past 10 years responsible for the fuelling the boom and causing the bust ? Was it not a combination of failure to regulate and profligacy by our government which facilitated and exacerbated the action of the banks ?
So the banks and government got us into this mess and your message is that we must now and rely on the same combo to get us out of it ?
We have made a start on changing the banks. Anything else we should be changing ?
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Robert,
I think that you've got one part of the issue right, but you've missed half the problem.
2009's prospects may well be related to the performance and willingness to lend by the banks to businesses and consumers, but it's as much to do with our WILLINGNESS TO BORROW. If we're all worrying about losing our jobs, I fail to see where the appetite for further borrowing is going to come from. People are paying down their debts not increasing them, and hence banks are deleveraging whether the government wants them to or not.
Which brings me to my second point which again I think you've missed. I think the issue about lending, as I've described it above, is actually more to do with MEDIUM TERM prospects for the economy. 2009 is probably going to be one thing only - UNEMPLOYMENT.
It's all over the press, it's all over the high street, and it's all over for the economy. Small firms and large well-known firms are all struggling, many have already gone bust and there will be lots of others too. The increasing unemployment and (perhaps more importantly) the FEAR OF UNEMPLOYMENT that is going to have the biggest impact on our economy in 2009, because it's this that drives our appetite to take risks - as business, as house buyers, as consumers, and as investors in the stock/bond markets.
I do think that this point is actually only just hitting home with most people. For most of the last 18 months I think there have been too many people convinced it is only BANKING AND FINANCE that is affected, something in a world of its own that can be contained. Clearly that myth is now being seen for what it was. This is affecting the WHOLE ECONOMY, and nobody can really say they are safe can they?
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We should be looking forward to 2009.
All that rampant greed, consumerism and keeping up with the Jonese's paid for by money we did not have did not make people happy but noboddy was offering up a viable alternative reason for living at the time. Enter stage right a natural self correction to that imbalance, beginning proper in 2009.
As Brits we are at our best and at our happiest when we are working for each other with our backs to the wall, we are no good at being decadent.
There will be social change and some not inconsiderable turmoil to come. We are the most exposed of all the nations affected by this, we are neither self sufficient in food or energy any more and have a hugely depleted manufacturing base. Our economy is based on smoke and mirrors, hard things to sell in the midst of a global recession.
Good.
We should roll up our sleeves collectively, not fragment and turn in on ourselves, create something new from all of this.
This is not a disaster, it is an opportunity.
An opportunity to re-direct our highley educated workforce to do something that is worthwhile, to invest in a new type of infrastructure and technology to become self sufficient again but in a sustainable way and in a way that brings us together.
Lets get on with it! Gordons answer of pouring billions more of money we do not have into a system that is broken and unsustainable is like trying to put a fire out with petrol. His delusion will need to go before we can move on, we need a voice to emerge that is honest, tells the public the truth and gives them something positive to work for and which we can broadcast as a positive example to the world in 2012.
It is a great opportunity to do something great, lets wake up to it.
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Just a note to all who believe that bailing out the car industry et al is money down the drain. One of the reasons we are going to have such a deep recession and the reason why it happened so quickly in the UK is that we have become a nation of IT Consultants and Financial Advisors and thanks to the the legacy of the Tory Party in the late 70's and 80's we produce almost nothing these days except for paper trails.
When a nation has a base for manufacturing and is still capable of selling products to other countries it can slow down the impact of a recession because money is still coming in.
The legacy of Mrs.Thatchers" me, me , generation " has finally started to bear fruit. She sold off the crown jewels (gas, electric,water, railways) stopped coal production and destroyed our manufacturing heritage. I hope that those who post on here who are " box bedroom " financial wizards and see all the ills thet we are going through as the fault of Mr.Brown realise that the current problems began 30 yrs ago with a lady who believed we should be a nation of homeowners. Unfortunately some now find thanks to that philosophy they no longer have homes to own.
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Are banks not classifed as "service" industry. Are not politicans public "servants". How the servants have make themselves masters.
"As a nation, our fortunes in 2009 will be conspicuously tied to the fortunes of our banks as never before.".
The financial institutions and financiers have done extremely well for themselves over the year, probably to the tune of at least £100bn in bonuses alone. Instead of tieing our fortunes to banks which would only encourage more demands for handouts, the fortunes of the bankers should be make to be tied closely to our fortunes.
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OK, so reading this blog and all the comments it seems that the general consensus is that we are heading towards a total collapse of society as we know it, no fuel, no jobs, no social support.....nothing.
Other than the single most annoying comment on here of ‘hold on, it’s going to get messy/nasty/bumpy*’ no seems to be able to offer any advice to the masses apart from ‘I’m prudent and great, the rest of you are all stupid’
So, what do I do as an average person?
Do I kill my family now so as to spare them the horrors that await?
Do I dig a bunker and stock up on tinned food and bottled water?
Do I try and reduce the only debt I have (mortgage) and keep working and saving as hard as I can while I can?
Come on you lot, you all seem to be able to tell us how right you all are in anticipating the end of the capitalist world as we know it, now can someone tell us how we should prepare for it, as all you have done for me so far is scare the **** out of me.
* choose which you want
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Another post that has spawned great debate.
Following the disparate views and good and bad comments for the post few months has been very entertaining.
Keep up the good work all of you!
Merry Xmas!
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The other BIG story in 2009 will be the MASSIVE amount of money the government will be squandering in order to boost its chances of winnng the next election using Keynes/ the recession, as its cover.
And the biggest UNSPOKEN story after that in 2009 will be the way the BBC fails to point out the waste and misuse of our money because so many of its journalists are dependant upon Labour for their stories and access.
I would like to see more, sorry, some analysis of the effectiveness of this massive squandering of our children's future - goevernment pensions, PFi etc etc. Fat chance.
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#114
the reason that bailing out the car industry is money down the drain is because they have a product they cant sell.........there are just too many manufacturers making cars that the population now cannot afford...i say now as before, we bought them with credit, that has now disappeared! i agree we should be investing in manufacturing, but throwing good money after bad is not the answer. Just ask alexandercurzon!
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ps. that old "blame thatcher" chestnut wont work, the current government has had eleven years to change anything she did and what did they do?.....nothing. why not blame the romans, it makes just as much sense as blaming mrs thatcher!!
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Wishing you a Merry Christmas Robert and a Happy New Year.
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post 114
Going on about Thatcher is OLD
news.Uk Manufacturing has been in decline for circa 80 years except for the 1939 to 1945 war.
The decline was mainly due to lack of investment lousy products
bad management and dare i say
lazy workforce which was due to
bad management.
Personally i would love to see manufacturing rebalance the UK
economy,but regretfully its not
COOL or SEXY.
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The price of freedom is eternal vigilance.
The price of economic freedom is also eternal vigilance, through the form of effective regulation and monitoring bodies.
Until the governments of this world realise this, they are doomed to repeat their mistakes and the honest hard working people of this world will continue to be trodden on by the greedy and unscrupulous.
Anyways, Merry Christmas to all :)
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happy bday Wharfgirl and try and have a good Christmas everyone!
today's post from Robert is sobre and serious; perhaps he is all partied out by now?
as some of you seem to be getting your New Year's predicitions in early, here are a dozen of mine:
(1) several more Mr Madoffs and Murdles will be uncovered in Wall St and the City of London; everyone in power will continue to express great surprise........
(2) the £ sterling (or little rectangular box as it is known on this website) exchange rate will settle pretty much where it is right now...... at about US$1.45/$1.50 and just above 1 euro; not because of any inherent UK strength, but due to the $ and euro also taking a bath in 2009
(3) there will be no 'early' election in the UK as it's too late for New Labour to have any chance of winning; Brown might just ask Vince Cable to come in to replace Alistair Darling though!
(4) house prices will continue to go south for the foreseeable future
(5) the Obama administration will rapidly begin implementing their huge $800bn infrastructure and job-creation programme but it will take at least 9 months before any positive effects begin to be felt - so the US economy MIGHT begin to perk up a bit by this time next year; Americans are inherently more optimistic than the British and they have nicer weather, so that will help them a bit
(6) Obama and the US face several huge risks though, foremost amongst them being to do with the Big 3 car companies: can the bridging loan buy the govt enough time to organise moving them into prepacked/managed bankruptcy in March/April? they are such big companies with so many suppliers, that they would need to stay in bankruptcy protection for years, during which time Chrysler would be 'amalgamated' into GM, but none of this will help to revive sales and changes consumer sentiment about cars
(7) the UK economy lags the US by 6 months or so, suggesting a few green shoots will begin to show here in Spring 2010 - just in time for the election, which will be close despite over 3m unemployed by then
(8) there will be serious domestic trouble in China and other parts of the developing world related to growing unemployment and economic hardship
(9) the price of oil will sit around $50 for much of 09 but then start going up again rapidly, making a proper economic recovery difficult to deliver; this means that even the most ill-informed neocon climate-change denier should be trying to engineer an economic recovery which is also environmentally sustainable through a move away from dependence on fossil fuels!
(10) the stock markets will be irrational and unpredictable; we should pay much less attention to them; the ftSE100 and DowJ are unrepresentative of our economies anyway
(11) we will hit some more submerged icebergs and have some other totally unexpected nasty surprises that I can definitely not identify, but I'll say this: so many discount leather sofa retailers will go out of business in the first half of 09 that IT WILL ACTUALLY BECOME DIFFICULT TO FIND AN ALLEGEDLY HALF-PRICE LEATHER SOFA FOR LOVE OR MONEY BY THIS TIME NEXT YEAR
(12) Somali pirates will continue to do very well thank you very much!
oh and Arsenal will still finish 4th despite their injury problems; and Peston will continue to get lots and lots of air-time, for better or worse
all the best; I'm off out to buy a CD from Zavvi now as feel rather sorry for them
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Message 116 Chazhead
What you do is keep working hard, pay down your debts and try to put some away.
There are individuals on this thread who have a rather romantic and dystopian view. Let us put that down to over-focusing on the details and losing sight of the bigger picture.
The big picture is that many people will be hit by the recession to differing degrees at different times in different ways.
It will be difficult and unpleasant but it will not be the end of life as we know it. However, we will all be changed in some way by the experience.
What I find particularly frustrating is the seeming failure of the political class - Mr. Cable excepted - to understand what is going on, explain it and propose solutions
Leadership seems to be like buses: there are none around when you need them and entire clusters when you don't.
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#116-Chazhead :
You should maybe try looking down the lane for some ideas :O)
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103) bobgateaux
You guys blame R Peston for talking the economy down doom and gloom.
To be honest I rather know what?s going on even if its gloomy than live in ignorance wearing rose coloured specs.
At least with none filtered news I know when the wolf comes to my door I am expecting it.
Robert is a reporter it his job to present the information he gets with his analysis, if he is wrong he takes the rap - if he is right he takes the credit.
Lets say Robert does what you say and filters his news, what will happen a sky reporter or tabloid reporter will just pick it up and run with it, result it still gets out into the public domain with a zealous partisan spin on it.
Put it this way I would rather read it on the bbc website than on the sky news website, which is looking and acting more like a sleazy tabloid everyday.
Lives effected - blaming Robert is not fair he reports what going on it is his job, I think Robert attempts to say it in a neutral way and gives us the facts on why its happening and what he thinks will happen.
It also distracts from the real culprits that have impacted ppls lives the way you say - banks, big business and global governments (including that man in No.10 and the Tories before), all of which rode this gravy train and let this system grow for years without adequate control.
Have you noticed this government is hell bent on blaming others rather than admitting it got even some of it wrong, almost like a child that been caught doing something naughty and blaming the other kids.
Latest one the uk is a global victim that?s rubbish, ppl where warning them for years and they took no notice.
If we are victims ? we are a victim of arrogance and carelessness by our population?s being greedy for status and our government's for being arrogant.
Robert have a good xmas and keep on reporting, filtering news will do us all a disservice.
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Still no mention of the government's £100 billion borrowing this year and more next year? That's money that isn't available to be lent to individuals and companies. One of the reasons for the current shortage of credit is that the government itself is borrowing such a large amount of the available money.
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Message 125 stanilic
Thanks, a sane response much appreciated.
Your advice is exactly what I am doing and will keep on doing all the time I can.
Have a good christmas, and dare I say it....a happy new year ;)
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If manufacturing is not the answer to bringing the country back to its feet then what is ? What do we produce enough of in this country to sell on ?
I may have a more simplistic view of the current situation but it seems apparent to me that it can be laid firmly at the feet of the banks and the successive Governments that have left them unregulated .
Is it now time for a different economic climate where baks and bankers are not rewarded for selling or creating bad debt and where people are more prudent with their money.
Alas I think that in 10 or 15 years time we will find ourselves in a similar situation as the banks continue on their merry way supported by more blinkered governments.
I stand by my " Thatcher is all to blame comment " ..it may be old...but its true.
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Lets look on the positive side; this will ensure a reform of policy shape that will minimise (not prevent) similar failings in future years.
I, along with most others will feel the clench in some way, but it needs to fought through with attitude of realism not fear, unlike Mr Brown and Darling’s approach.
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Robert, you got first slot on Northern Rock but since then your facts are getting less fullsome.
Banks have and will always lend the difference is that now they intend to be more discriminatory than before and will already introduced sliding scales of rates for home loans dependent on the size of the deposit.
Tell me one person you is still not getting offered loans now, The killer is that they are no longer offered at give away rates.
Whether business or the public are prepard to pay the rates is another mattter. Either way its back to market forces now as never before.
What must be done however is to remove the bank directors and Regulators who got too cosy with each other and have in situ a new approach to banking in its entirety.
This can never be done by thoise ruinning teh show now simply because they have shown themselves to be singularly incompetent and classically asleep on the job.
The only reason this hasn't happened yet is because these peopel are intent on sticking it out for full compensation and loss of office.
You have ot laugh and cry that they are in such denial, we can only hope that the next government does the right thng by the people of this great country and stops this outrageous cabal of muppets ever working in banking or as directors or any companies again.
Oh yes and to all fellow contributors Merry Christmas.
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BROWNENOMICS
LEND THE BANKS A LOAD OF DOSH THEN ISSUE WORTHLESS
GILTS TO BORROW IT BACK
AGAIN.
MUPPETS. . . . . . . ?
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#130-andyjac06:
"If manufacturing is not the answer to bringing the country back to its feet then what is ?"
If would be great if it were possible. I'm an ex-engineer and can't seriously believe that we will ever compete (production-cost-wise) with the East.
"What do we produce enough of in this country to sell on ?"
Surely part of the problem is that the UK doesn't even produce *enough* to survive - let alone to sell-on. So it prints/borrows money to get stuff from abroad.
Self sufficiency will be a difficult enough challenge in the coming years. which is where I'll be focusing my attention.
Knowing whether Maggie, His Toniness or Gordo caused the situation won't keep me warm at night or feed the family.
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I hope Dr gloom was being cynical in his comment (no.3)
Robert - try talking about the positives for once. You seem to revell in talking down our economy. I'm amazed a man of your intelect does not realise the market operates like a herd of frightend sheep and you insist on playing big bad wolf. Shame on you, you are lucky you live in a country with a free press, however a free press has a duty to be responsible!
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Alistair Darling's 12 days of Christmas gifts to the City this year:
12 market meltdowns;
11 (thousand) lehman layoffs;
10 toxic traders;
9 negative nest-eggs;
We 8 Peston's whinging;
7 short-sold savings;
6 hedge funds haemorrhaging;
P Forty Five;
4 financial plans;
3 eyebrow trims;
2.5 off VAT;
And a City full of Bowler Hats.
We can at least be grateful for the last one. Merry Christmas!
www.bowlerhatday.com
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Post 116 some advice, take it if you wish ignore it if you want.
Try to keep calm. Even if unemployment rises by 50% to 3 million there will still be ten times as many people employed as unemployed. People will lose their jobs but many more will keep them.
Be sensible about your shopping and try to build up some cash reserves if you haven't already.
If you have any credit cards you don't use and have nothing owing on them then cancel them. It will improve your credit score should you need to get credit in the future.
If you have a mortgage ensure that you keep the payments up. If you are on a variable or tracker mortage your payments may well have been fixed annually some time ago and you will be effectively over paying. Keep up those over payments.
The benefit will multiply as you will be paying back more capital. Also if interest rates stay low when your payments are reviewed you will have got used to living on the amount left after a higher payment. The reduced mortgage payment will feel like an extra pay rise to you.
Check to ensure that you are getting the best deal available on your gas and electric. This could save you GBP 5 a week or more.
If you have car and household insurance check at renewal that you are getting the best deal. Again this could save a decent amount of money.
Finally draw up a list of things you need and things you can do without so that if you do hit hard times you can make a rational choice and cut out the luxuries and still be comfortable.
Most importantly don't panic.
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How can a country that abandoned manufacturing as a basis for the economy, that lacks most raw materials, that has seen the much trumpeted value-added financial system melt away; get a pass to the sunny uplands of stability & personal solvency?
Like Harold Wilson's 'pound in your pocket has not been devalued''; the present PM is spinning the bulk of problems away from the current taxpaying voters into some mythical balance sheet that will hang around anyone left living on these shores for generations to come.
Banking is bankrupt. Greed has done for us, despite the greedy being mostly a motley crew of spivs & bankers who have kept the ill-gotten gains.
UK plc is in virtual liquidation.
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#134. vegetable_grower
Quote: If would be great if it were possible. I'm an ex-engineer and can't seriously believe that we will ever compete (production-cost-wise) with the East.
Totally agree with your comment.
And the little of highly skilled manufacturing that we have right now might have disappear within 10 years (Aeronautic manufacturing is of a strong example)
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My wife and I are retired. We managed our money matters carefully, and the only debt was a mortgage (now paid up) made under the old system depending on my income solely.
We have savings whose interest boosted the pensions to make the whole thing viable. If the bank rate descends to zero, whether or lot there is tax relief, then that part of our income will be zero.
Like many others of our generation, we will be punished for the fickleness of younger more narcissistic people.
The way of the world!!
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Ok, now as a simple customer service banker who has spent years arguing with his bosses about the stupidity of some of their actions, ideas and policies all we are seeing was only to be expected but the pigs gorged and we are all about to pay.
However now we are where we are,I have a question?
Gordon thinks that he will avoid the worst ravages, short term, of the recession by borrowing more. He admits that this borrowing has to be paid for.
What I dont understand is how we will be able to benefit from the good times when our hands are still in our pockets repaying this extra debt?
Gordo might make the impact shallower but he will make it longer. Anyopne else think there is a cynical underplot? He knows he's out of office soon so he's laying some mines for the next government. then when they fail to overcome these his lot will claim how bad they've done in the hope the public will fall for it and let him in again.
Now to the question - why does the BBC, other commentators and especially Mr Peston seem to have completely ignored all of this????
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#15
Government control of money supply. Know where you're coming from, not least the US situation with the Fed.
However we would need a real culture change in power relationships for it to do any good.
Change
Some (like some return to accountability) may just be workable. Others (like Vince for PM) sadly not.
My wish list would be:
1) A thoroughgoing demolition of the Official Secrets Act. For years this has disastrously hidden mediocrity, mistake and plain disastrous decision making across a vast area of our lives. Arguably this has been one of the founts of declining accountability.
2) A properly trained and remunerated watchdog with clear independence and the support of GB public. We need to start training this meritocracy now. Kevin Costner might help.
3) A proper Freedom of Information structure which does not, among others, rely on the whimsy that a past PM's wife was a civil rights lawyer
4) A Bill of Rights. We can no longer function on the hallowed unwritten constitution. It's just that much too flexible it appears.
5) Executive Parliamentary Committees with real teeth. Even better than the US model would be great
6) A more aware and informed British public given voice
7) Weekly Bremner Bird and Fortune
8) Mandatory banning order for anyone mentioning the 'special relationship' with the USA
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Correction
Civil Aeronautic manufacturing
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#143-glowingHorizon:
"Correction - Civil Aeronautic manufacturing".
Agreed - though the death business is still looking good. (I used to be in avionics myself).
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lets hope in 2009 we can get rid of brown.. king... the fsa ..the mpc.. and get some people in who know what they are doing....ive never seen such a dispirated xmas..i fear for 2009 with this shower in charge..who just dont know what they are doing..and whats worst is the tories and libs are just as bad.....i just want to stick the boom and bust tag right up browns arxx
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Why doesn't somebody print the names and addresses of the Heads of Banking that refuse to go? Then people can go round and express their appreciation in person.
As for Prudence and his little Darling and the rest of this disastrous government, 'Mrs Thatchers greatest achievement', if I remember her words correctly, they cannot avoid the ballot box, then we can sling out this useless bunch of 'baby boomers'.
P.S. How did Peston learn to speak intelligibly?
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Thanks for the practical advise from economicallyliterate on post #137.
As well as looking after no. 1, can the average person contribute to helping the UK economy as a whole recover?
Thinking about this, for most people, the place their contributions can realistically benefit the economy is at work.
It is vital those who realistically are in a position to create value for their employers, either keep doing this and/or look for [more] ways to do this.
Their are a lot of people who either aren't in this position, or find it difficult to see how they can do this. What would your advise be to them?
Cheers
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May this year live on in infamy, here lies the Labour party buried in 2009 by Gordon Brown.
I salute you sir!
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#137 you are so pompous...for god sake.....its easy for people like you,who no doubt, have done ok from browns irrisponsibility,to pontificate about the situation.....but you know nothing and nor do most of us...i suspect the news is a lot worst than what even this dispicable government is telling us.
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It appears that people didn’t realize yet the true consequences of the power shift toward the East.
35% world GDP generate doesn’t mean anything.
What is the true GDP or inflation etc… when we realized the way our gvt has massage the figures
Cash is king! Always being and forever and ever!
In our world of supply chain,
With whom will you do business? The one loaded or the risky one full of debts?
So below, so above
The west is no longer leading the world, let’s hope that this new “world leadership” will be willing to support us during our transition toward our renaissance.
Happy Xmas every body
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... and don't forget that those 'stupid' loans were welcomed and encouraged by Gordon Brown. They certainly flattered his management of public finances. Chickens are roosting for Christmas. Happy New Year!
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It appears the banks, directors, specialists etc did not really know what they were doing? What role have the big audit firms played in this? They have been notably silent. In simplistic terms is not part of their role to review and report on the adequacy of internal controls financial and otherwise asset existence and values, assess the business abilty to coninue to trade and not least to understand the business. If the Banks' managment didn't how could the Auditors? Robert It would be interesting to review the last few year audit reports for the major banks and finance houses across the globe and mark any concerns - I suspect there are not many (if a one). As most of these are audited by the BIG 4 firms is/was there any conflict and any scope for lack of diligence? There are huge fees involved and not the most conducive atmosphere for whistleblowing. Perhaps a future Panorama episode? I hope at least the Partners of these firms are having a quick look at their firms' professional indemnity policies. Was there movement to some form of limited liability status and efforts to restrict liability motivated by what they knew was about to explode in the finance sector?
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Thank you Robert for all your hard work this year.
And thank you to everyone who posts comments here which are thoughtful and thought-provoking. That's most of you. Ranters, trolls and the power-of-positive-thinking brigade not included - you know who you are.
Thank you too to the moderators for preventing this debate degenerating into the kind of largely unreadable free-for-all you can see on the websites of national newspapers. Even if you seem over-nannyish sometimes.
There are many, many more of us who read this blog but comment rarely if at all. We read the comments attentively too, and soon learn to separate the wheat from the chaff.
A final point in support of ThorntonHeathen no. 105. Robert, I know that public service broadcasting is a tightrope walk, but could you say more about the wider context of this crisis? In particular the problem of an economy addicted to limitless growth running up against the wall of finite resources. It's striking how many commenters on this blog take the peak oil/energy descent thesis very seriously. Equally striking how few mention global climate change (which our politicians take so seriously when they're wearing their green hats, but not when they're wearing their build-a-new-runway business-as-usual ones...)
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The only practical answer I know of is Transition: increasing the resiliance of your household and your local community.
Look at www.transitionnc.org/?q=node/73
and get involved for the sake of your kids.
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Some interesting comments on here from the doom & gloom merchants to more constructive, if a little tongue in cheek (like Somali_Pirate).
I heartily agree with Jericoa, the UK needs to stop trying to build an economy on service industries and importing most of its food and fuel. WE NEED TO BECOME SELF SUFFICIENT and START EXPORTING GOODS. What is more we need to START SAVING and STOP BORROWING.
If only we had some leadership instead of the usual motley crew of self seeking politicians.
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If the state now controls three banks, Northern Rock, Bradford & Bingley and Royal Bank of Scotland, and will have a huge stake in a soon-to-be created fourth, LloydsTSB/HBOS, then these Banks are effectively owned by the people and thus for the people. Maybe the solution is for the "people" to move all available funds into these banks, stimulate normalisation of credit flows from/to these banks and to the people at reasonable but sustainable profit rates - this is almost like Building Society model, isn't it, where the members interests come first and I guess the public are the members !
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"All of which can be summed up as "ouch" for businesses and households"
?? You must be joking!
UK is the next Iceland, it's just the agony is being put off.
UK PLC is just up sh..t creek without a paddle.
I hate this BBC political correctness stuff.
It reeks of a crony corporation afraid to tell the truth.
The British ARE mature+ready enough for the truth as it REALLY IS you know!
Stop talking down to us, and patronising everyone.
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When will someone in authority come clean and admit that the entire British economy has been one big Ponzi scheme for the last 10 years.
Unlike Madoff, nobody will be brought to book for this massive scam perpetrated against our citizens. We are just expected to take it on the chin.
I predict that the pound will become worthless over the course of the next 2 years. How can there be another outcome?
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"In an extreme and highly unlikely case, if the markets viewed our banks as recklessly managed basket-cases, that would have an impact on the value of sterling and on the ability of the government itself to borrow."
Never mind the banks, country is a recklessly run basket-case, being run by a reckelss basket-case.
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Some fantastic blogs and in and amongst there is some slight signs of realisation that banking, retail etc are service industries and are not going to bring back wealth to this country. I believed that we were going to have to descend to the very bottom of the pile before people started to remember that you can make and export goods to generate wealth. Don't worry veg grower we will soon be able to compete on cost with the east as they too will have surpassed our standard of living.
For the BBC, R.Peston and the government 2009 will probably still be all about the banks and in 2010 we will still be heading in the same direction but I seriously believe we are just starting to see a few pennies dropping with a few people. Hoorah and Merry Christmas
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What Robert is describing here is the ongoing process of debt transfer. When home-buyers, consumers or companies cannot pay their debts, this gets transferred to the banks; when this burden gets too much for the banks, it gets transferred to the State. If the burden gets too much for the State as well, they will try to pass it on to the IMF. It is a deadly game of 'pass the toxic parcel'.
The hard knocks will follow this pattern of migration. Individuals began to suffer when house prices turned down; businesses began to suffer when consumers suffered; banks suffered next, and very nearly collapsed; now, the pressure is on the State.
The Big Question is whether the State (and its all-important international credibility) can carry this burden. For lead-indicators, watch Sterling, and watch gilt yields.
Can the government really borrow at least GBP 120bn next year, at low interest rates and in a seemingly-disintegrating currency? It has to be doubtful. Next stop: the IMF........
.........which is not as bad as it sounds, if you consider the silver lining. That silver lining is the likelihood that, as in 1976, the IMF will impose strings to its help, strings that will include huge cuts in government spending.
As in 1976, so in 2009, the IMF will take a Labour government manifesto, tear it into pieces and throw it in the bin. This is not as bad as it sounds for Labour, oddly enough - they can blame the ensuing pain on the nasty foreigners at the IMF. Well, none of this is Gordon's fault, is it?
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We're throwing money at a busted system in it's death throes and we are missing a huge opportunity to really change the way we live and use energy.
Massive improvements could be made in almost every aspect how we use the earth's resources. We are right on the cusp of habitat destruction for many species and overfishing the oceans empty.
Propping up the institutions whose only guide is to consume more has been a kick in the teeth for those who think there are far more pressing things to be paying for.
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124 Somali Pirate:
Absolutely spot on, this is a great, logical and persuasive list of what is likely to happen.
On point 7, you may be right about the green shoots, but I wonder about the nature of the soil that they have to try and grow in by 2010 - this soil could look like scorched earth, if 2009 is anywhere near as bad as I suspect it is going to be. I am not sure how well green shoots prosper in scorched economic earth.
Your points about unrest in China and elsewhere (8) and submerged icebergs (11) may be linked, in my opinion. What if the Chinese economy is already doing worse than the official figures suggest, and gets worse still? I have limited faith in the data published by a one-party regime, and my hunch is that China's economy is decelerating far more rapidly than Beijing is admitting.
Piracy may indeed be the business to be in for 2009!
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If Monday's Panorama is anything to go by, 2009 will be all about Robert Peston.
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#158 good ...the pounds worthless now....i just like to tell brown what i think of him...and all you people who dont vote get out there and vote this useless brown out of office.
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If everything happens as predicted above (total meltdown) then suggest you put your money or what is left of it, into security services. Particularly ones that offer security to the stock broker belt in Surrey because they will need it! Bound to be growth.
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Well, I would be delighted if Egg bank go out of business sometime soon.
They have recently needed to get in touch with me, and have an automated calling system for doing so. Despite my phoning them back and resolving what they wanted to talk about, the automated calls keep coming, about once an hour.
They tell me that the system updates overnight, so the calls will keep coming for the rest of the day and there's nothing I can do about it.
When banks treat their customers with such contempt, they deserve to go out of business.
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#147 Right2blog
As well as looking after no. 1, can the average person contribute to helping the UK economy as a whole recover?
It's an old slogan but "buy British" is actually a great way to help the UK as a whole. It won't stop the recession, but it would lessen the impact. If you see two similar products in the shops and one is British and one isn't, buy the British one. That goes for everything from minced beef in the superrmarket to big items like washing machines.
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It seems patently obvious that if taxpayers now own the banks,then the banks should lend to whomever we as the owners tell them to.our prudence will be sublime in this.We won't be bailing out tycoons,or engaging in Ponzi schemes.We won't be asleep at the wheel and pretend to fail to understand what is going on.In this way we will end this crisis in the fashion by which it should be ended,with wisdom and reason aplenty.
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Peston says
"So many banks are lending less to big companies"
In fact, the latest (Q3) Bank of England statistics show bank lending to non financial corporations growing at 16.7% pa
.... and lending to other financial corporations growing at 13.6% pa
Media journalists seem to prefer speculation to reporting facts.
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#155 Henridecat
I agree that the UK needs to expand its manufacturing and knowledge economy in order to get some foreign currency and simultaneously keep folk employed.
I suspect the government does too.
The way this government is trying to do it makes no sense though.
Gordon Brown just does not get it. He spent all his formative years surrounded by clever folk at universities. Naturally he sees them as the answer. He goes on trade missions to the US where he sees all sorts of new companies springing up from universities. He tries to copy that model here. He offers loads of money to university spinoffs. The clever university types know which side their bread is buttered and tells him what he wants to hear.
What he doesn't understand though is that the very act of subsidising universities actually destroys what is left of manufacturing industry.
Universities have their hands out begging telling everybody and anybody that industry needs to catch up and to do that the manufacturers need to get into bed with universities.
But the universities do not understand competition. They just understand how to get the government to send them soft loans and grants. Meanwhile they extinguish what is left of industry.
Universities should educate young people, period.
Industry, hi tech competitive industry should provide jobs, period.
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#17 Spot on.
Re-financing business will take the form of the old credit union where borrrowing is related either to sharing in the sum of all savers in the institution or monies loaned to those the savers deem trustworthy. Its genesis will perforce start off small so smaller businesses may get more help sooner than those who seek/demand a large share of the available assets.
How these failed knights of the banking world can justify their remuneration will be interesting. As #17says if the rewards at the top are not decimated for something realistic then all hope is gone. Shareholders or those with a physical input should be required to vote or ratify rewards for those in charge. Just as we shall all do at the next election.
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'The line between private sector and public sector, which became blurred in 2008, may become almost impossible to see in 2009.'
Ditto for the US, and Canada, and much of the rest of the world.
And this, friends and neighbors, is the DEFINITION of moral hazard!
*****
Merry Christmas, everyone. The great good news of the season is that grace abounds, and that a Providential hand is at work, even in our frailty.
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It's becoming difficult to find the words to describe how bad this will be. I see this in your own blogs.
After hearing the CO of Barclays bank describing the banks inability to fill the deep holes left by other lenders who have now left the scene it is difficult to see how this will ever be sorted out without a major slump.
The Christmas period is going to be a busy one for auditors and receivers preparing for the New Year rush.
I think you will need to put a health warning on your New Year blogs for those of a nervous disposition.
Those of us who have been through recessions before know that this is something very different and ideas are needed urgently as to how to pick up the pieces and start from scratch.
They've got a couple of weeks to start thinking.
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#168. Adam_C_UK wrote:
"It's an old slogan but "buy British" is actually a great way to help the UK as a whole."
Sad to say though our erstwhile leadership doesn't agree. In his first interview with the FT Robert's chum Alastair Darling said he didn't believe in economic patriotism.
#171 ....
Sorry old chap but this Govt does not believe the UK needs to expand its manufacturing and knowledge economy. On the contrary it will use the recession to further its aim of deindustrialising the UK by allowing companies to go bust or be bought over by foreign ones.
A year ago following a report on the UK fuel cell sector a Treasury official told a DTI official that actually the Treasury would prefer not to have to spend money on this technology but let other countries develop it so we could buy what we want from them when we want it. Makes you proud eh.
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135: Aldfort:
No cynicism from me here. I think he has done a good job. If you think it should be his job to talk-up the market then you're living in fantasy land. The last thing we need right now is some 'behind closed doors' agreement by leading financial journalists to spoon-feed us things that those in the know want us to hear. He's exposed the mismanagement, foolishness and arrogance of many of those running our financial 'institutions'. He should be thanked for this. I don't want to live in a country where someone, somewhere, decides on my behalf, what I should hear and when I should hear it. Would you really want to gag him? There's already too much 'over-policing' of our society by the current government. The last thing we need right now is pressure put on journalists to tone down their reports. We need, and deserve, good solid information on what's going on. I think he generally provides this. So there you have it.
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Many geese have been cooked this christmas and few will be served with all the trimmings.
A women in the office was telling me about her trip to London for Christmas dinner at The Berkeley with Chef Marcus Waring costing close to £500 for 3. She then went on to tell me that she was a bit worried about her finances and was looking to cut her spending next year, but wanted one last big blow out this christmas.
She says she paid £69k for her house 9 years ago and thinks it is worth £250k. However, she then went on to say that her mortgage now is £190k and she has £20k in credit card debts.
She should be virtually mortgage free and well able to face a large loss in her house value, yet has added £141k of debt to live the good life. This is what has brought the nation to ruin - greed and stupidity.
I wonder who she will blame for at best years of struggle and a huge drop in her standard of living.
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Banks to take notice?
Might be worth pensioners or dispossessed visiting the banks we now part own and just stand inside making sure that everything is being run as it should be? Make clear that you are there to inspect your investment. You might ask for the bank's business plan or make some salient point about the advertising, particularly when at odds with the known facts. Tough on the High Street branches, but one way of filtering through that we are now in charge. Not sure that you can be charged with obstruction in a bank unlike the royal highway - and it certainly can't be trespass.
All this type of civil behaviour, of course, only if nothing is done in the near future to ensure adequate direction and accountability. Beheading bankers or torpedoing yachts might make an attractive headline but really isn't the answer. If you want to eat an elephant it's best a spoonful at a time.
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Since we, like the US a service based industry, UK PLC is one big Bank in essence. Without credit we cannot survive. Given our dependence on credit you would think we would keep something aside. Except we had Mr Brown, who spent it all on the upstream (when it was most expensive to spend), and borrowed in the down stream, when it was also more expensive. GB negatively hedged itself the UK economy against recession, and we are again in a Labour induced recession. Also he made sure he could pass the buck to people who they employ, (FSA, BOE), thanks GB.
In 97 I knew this would happen, I would just like to personally thank Labour voters out there for the Recession we are all enjoying this Christmas.
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#175 Wee-Scamp
I know a little bit, work wise, about fuel cells. Just enough to worry me!
The Treasury official you mentioned might have (probably for the wrong reasons) got it right. There is so much spin and waffle spoken about fuel cells it is very difficult to determine what is self interest and what actually makes energy sense.
Steven Chu, physicist, Nobel Prize winner and director of Lawrence Berkeley National Laboratory has been slated by Obama to be the incoming Energy Secretary. Presumably he knows what is what. It will be mighty interesting to see whether inefficient Bush sponsored hydrogen and other fuel cell programs get axed.
If so there will be gnashing of teeth on both sides of the pond.
Whatever happens Brown will continue to promote the universities.
It's what he knows. And they thank him. It makes him feel good.
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Another good point prudeboy 171. It is always true we are a product of our experiences. I tend to think though that eventually the population of this country will realise that we have to balance the books by producing something and the politicians will then jump on the popular opinion band wagon. That's also the way to go Adam C 168. but also Pride in Britain comes from self worth.
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Personally, I'm going to make a significant contribution to supporting one of Scotland's major industries over the next week.
Cheers and Happy Holidays to you all.
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#180 Prudeboy
I don't disagree about fuel cells. I find the idea of using them in vehicles as ludicrous but they could have some benefit as static combined heat/power units for domestic use.. But that's not the point is it.
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The effect of the down turn will be felt most strongly at the weak points of the economy. You are right to draw attention to the risk to sterling, which because of the large overseas borrowings is a particular danger point.
Surely it is now time for the government to announce that its intention is to join the Eurozone as soon as possible. This by itself would provide some protection for sterling. An exchange rate should be agreed and a referendum date and timetable for entry fixed.
Apart from sentimental attachment to the pound, the only reason for not joining in 1997 was the fear that European level interest rates, even though they would have been good for UK manufacturing, would have interacted badly with the UK housing market.
It is a pity that steps were not taken to bring the housing market under control, by introducing tighter controls on mortgage lending. This would have saved us a lot of the grief we are now suffering, but the bright side of the coin is that now the asset price bubble has burst, the main obstacle to Eurozone entry has been removed.
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Robert says "it matters that the banks run themselves in a prudent way." This reminds me of my time at St Andrews University in the 1970s, when I banked with the Royal Bank of Scotland on Market Street. Every month I received a remittance from my father in Canada which was duly deposited to my chequing account. The idea was that I had to pay for my monthly expenses from my monthly allowance. If I went through my allowance in three weeks I had to go cap in hand to the imposing bank manager, who I will call Mr Matheson. He would say, "Mr Chedworth, perhaps you can give me one good reason why we should advance you ten poonds for the remainder of November?" He was an awesome figure and the terror of the overseas students at St Andrews. (He once told me how proud he was that the first prime ministers of Canada were named Macdonald and Mackenzie).
What has happened? Where are the Mr Mathesons when you need them?
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We went off of the gold standard and this is the end result. This is not a recession, would that that was all it was. This is the end game. We need a new backing for the currency and without it we shall not be able to borrow our way out. The banks are incapable of resuscitation - they are bust - bust by the commission men who have been running them these last twenty years. Commission men who did not understand that wholesale money - Libor - was not a traditional part of banking, but a temporary anomaly that did not exist before the late sixties and was always destined to disappear for ever come a severe downturn in collectability of bank "lending".
We need to bury Keynes and return to Adam Smith somewhat sharpish.
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183 Wee-Scamp
Off topic of course but who cares - it is Xmas after all!
I too am worried about static fuel cell installations. I have not done an energy balance on them.
They might work. But:
You still need to get the natural gas to where it is to be used, uses up energy, resources. Why not run an electricity cable instead?
If there is to be a "feed in" when the electricity is not needed locally then would it be better, more efficient, to use a whopping big power station. Economy of scale etc.
The real killer though would be the use of platinum.
Scarce resource, energy hungry whilst being refined. Really really energy hungry whilst being recycled.
What is the longevity of the platinum used in a catalyst pack? Etc etc.
I get the feeling none of the above counts as long as the grants keep coming in.
I could be wrong of couse.
Something to think about as I walk to the pub in about 10 minutes..
Happy Xmas!
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Merry Xmas Robert and lets hope there is a little bit of good news along the way in 2009. If you bump into your colleague Nick Robinson over Xmas have a word in his ear about a bit more balanced reporting in the new year please.
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Indeed it does matter that the banks run themselves in a prudent way.
Unfortunately they received a strong signal during the 1980's that 'greed was good'. That, plus non-interventionist governments, is all it took.
As for the backing for currency, what we really need is a strong manufacturing economy supported by sensible investment. That we don't have it is also a hangover from 1980's thinking.
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Civil unrest Blah Blah Blah, if it gets to that stage the last thing we need to think about is money ;-)
Don't get me wrong, its certainly the case that some people should actually hang for whats gone on.
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"The line between private sector and public sector, which became blurred in 2008, may become almost impossible to see in 2009"
Wow, that's quite a statement. Unfortunately, if the government really does try and bale out private business to that level it really will break us as a country.
I think that by about April or May next year a couple of changes will have happened.
1) Most businesses will be convinced this is a 2 year recession. Instead of fancy schemes like pay-cuts and reduced working hours, they reset their forecasts significantly lower, and trim workforce significantly.
2) Home owners who were not prepared to sell at discounts, start to realise that the previous high prices really were a blip, and new lower prices are here to stay for several years. As a result prices drop suddenly by 3% a month over the Spring/Summer, and activity starts to increase.
3) The Government will have admitted there is no upturn during 2009, and announced many initiatives around building for the future, with large incentives for businesses investing in alternative energy etc. But as these will not cause much dent in unemployment, there will be many schemes like school building, to get builders back to work. And civil servants get buy/rent a car schemes at low rates after deals are struck with UK car producers to shift stock.
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since we are all screwed anyway, I'm off to buy myself a nice new M3.
Selfish eh? self centered eh?
Well I've gone without whilst everyone else had their snouts in the trough!!!
Its better to burn out than to fade away.........
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92. At 8:36pm on 24 Dec 2008, JavaMan1984 wrote:
since we are all screwed anyway, I'm off to buy myself a nice new M3.
+
sometimes it's best just to spend the money when you can,
you'll have less decisions to make, but have you paid off your credit card yet?
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Thanks for your stuff, Robert. I may have missed it but have not noticed any formal report which refers to the practice of some lenders (sub-prime, I guess) which operate a business model allowing staff only to lend to borrowers most likely to default, thus gaining control of the asset offered as security.
Some organisations so control the loan that, unknown to borrower, a rescue loan is offered at exhorbitant rates from anonymous sister company befroe borrower is finally brought down.
Also, not much has been made of the underlying cause of failure, viz, the wrong sort of borrower ('one who is bond to fail'). Is this not yet another example of the ugly face of capitalism?
Best wishes and keep up the good work.
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#51 sashaclarkson
The principles are a good start, do you have any ideas about population limitation?
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OK, part of the way out of this mess may be through prudent investment in efficient manufacturing. But manufacturing of WHAT? Surely not cars powered by inefficient internal combustion engines! Even those people who can afford to buy a new car are not doing so because we know that present automative technology is outdated but the shape of next generation technology is as yet unclear. Much better to keep the old banger on the road and wait for something that might be energy-efficient, economical and reliable.
A large part of our manufacturing capacity needs to be diverted to the production of the technological infrastructure of a post-oil and post-coal future. But where are the UK manufacturers of wind turbines and solar thermal panels??
But the focus upon manufacturing obscures the fact, universally overlooked here, that one of Britain's most important export industries is education. The international status of English gives us an advantage over the Europeans, and the recent devaluation of the pound gives schools, colleges and universities a competitive edge over their US competitors. Now that the latest Research Assessment Exercise has confirmed that a very high proportion of UK research reaches the highest international standards of excellence, now would be a good time to make a substantial investment in marketing UK higher education courses and research training to the rest of the world.
Britain is unlikely ever again to be the workshop of the world, but it could be its most important educator.
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are the book sales dropping so much that you are still spinning this story.
sorry Rob - heard it......move on
any chance of a new report on how the media exacerbated the credit crunch to such an extent that people were queing up to take money from the high street banks and people are afraid to spend money which has resulted to problems for retailers and banks all over.
As a media 'personality' are you hiding from this subject?
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Recently HMG were going to tax gas guzzling cars out of existence and now they are poised to save Jaguar and Land Rover. You could not make it up if you tried.
My biggest worry is that we do not make anything that the rest of the world wants or cannot make themselves, and with the collapse of the Financial Sector where do our future earnings lie.
We are a country in terminal decline and if printing money is the answer then God forgive us for behaving like a tinpot dictatorship.
We have a welfare system that is unaffordable and a Public Sector workforce that is bloated but still nobody is accepting this fact within government.
One day surely the s**t will hit the fan leaving us living in a country that will be a laughing stock to the rest of the world.
I am glad that I am 66 years old and not 26 years old.
Happy New Year to everyone on this blog.
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193 Kikidread,
That reminds me, I need to get 15 Credit cards at least and blow the lot !!! (I have NO credit cards, no loans)
Its time for me to live the high life :)
Have a merry xmas.
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This comment was removed because the moderators found it broke the House Rules.
Robert,
I find your lack of faith in capitalism disturbing .............
also,
Don't be so proud of this technological terror you've created (Peston’s blog), the ability to destroy the world financial services sector is insignificant compared to the power of the force ...........
Ok, I’ve had too much swally already!
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#126 vegetable_grower
Thanks for the link, interesting
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Robert Peston is only telling it like he sees it. (that's his job, please let him get on with it)
This is a long one so feel free to skip to the next one.
We are all (well apart from some of the posters here) in the denial stage,
next will come acceptance of the situation, then comes a feeling of depression/despair. Finally there is a call to action where some see a possibility of a new situation and have a plan to achieve it.
RP is at the second stage,acceptance of the reality.
Being a reporter he can only do his job and report the situation as he sees it. (he will get to stage 3 shortly when he sees that the measures taken so far have not had the desired effect)
There will be no solution possible to our financial woes until we get to the last stage.
Get used to it. Get over it. Whateva. There is no way of bypassing any of the stages, that is just self-delusion (meaning that you are in actual fact still in stage 1)
My view is that we are in the sh1t but still in stage 1
but so what, we've been here before, the hows and whys we got here are myriad but at the end of the day when you are up to your ankles in crocodiles, draining swamps might not be such a good idea anymore however croc skin handbags might just work.
We (as a nation) are mostly educated, innovative, hard-working, idealistic and forward looking.
This is not Zimbabwe.
Mostly our leaders are not corrupt, they almost all set out with our best interests at heart.
The banking system may have things wrong with it but (most) bankers still want to do the right thing.(see the post above about the old internal banking code and post about Scottish bankers, most people (including those at the top) in the industry would welcome a return to those standards)
We all lived high on the hog (we are just party people at heart, we have lived high on every boom in history), which is fair enough, we all knew (however deep down) that there would be a price to pay.
But...and it is a big BUT (despite being told never to start a sentence with the word but !)
But we are a naturally innovative, energetic and creative people, how do you think we managed to create a physical empire with so few resources, how did we create a global financial services industry from scratch in the Thatcher era, it was because our backs were to the wall and it was do or die.(she killed manufacturing so we invented something else)
Our designers/architects/design engineers are the best in the world, whether it be fashion or art, design for manufacture or design for innovation
There is no getting away from that. (crack open your mobile phone, any make, you will see at least 9 UK designed chips in there)
The world and its dog may be in recession/depression and it is going to take some serious forward thinking to get us out of it, that is the one and only thing that the UK is uniquely placed and has the talent to do.
There is only one environment that breeds this kind of thinking and it is here (it must be the weather cos we do it despite any kind of positive/negative assistance)
On this blog there are an unimaginable array of comments and views, some critical, some constructive, some just 'avin' a laff.
Imagine the same blog in the states 'You som kind of a commie, jus hold on there while I get my gun' or in china/india/zimbabwe 'whats a blog ?'
What we need now is leverage (or is that a dirty word now) of the form 'if I had a long enough lever and a pivot point I could move the world'
Ideas are levers, people grabbing and grounding those levers are pivot points. We have ideas, we have people....
So having wizzed past stages 2 and 3 we get to the big Ideas for fixing all that is wrong with the world (the reality is that there is nothing wrong with the world other than someone else other than us appears to be getting rich)
Big Bad Idea 1. give Vince Cable or anybody else full executive powers (even for one day)
Give the buggers 1/2inch and they will take a mile, they will stifle innovation (new thinking) which is one of the few things we have got going for us.
(what happens if Vince keels over on day 2 with a (n induced) heart attack, does his unelected successor carry on)
Big Bad Idea 2. more regulation
It was this that got us into trouble in the first place, how about less regulation but what regulation there is to be actually enforced. (that'd be a novelty)
What to do next.
Don't Panic !!!!!
Well beans and corned beef are probably not a bad investment (ignore the sell by date on tins that are integrally good, they will last the lifetime of a giant tortoise), after a short period of deflation we will be heading into a generationally unknown period of hyperinflation probably officially peaking around 22% but 'in yer pocket' about 26% at around q4 2010, given that you can pick up a tin of beans for 19p, these look like a good short term commodity investment if you can buy and secure a container full.
Better still would be a long term commodity investment in your local farmers coop.
Be fast and nimble.
Invest in flak and anti stab vests that you can sell down the local market - get in then get out b4 the local hoodies take over.
Better would be to invest in a local manufacturer of school uniforms as these are always going to be in demand (and fuel/transportation/import tariffs will affect the availibilty of foreign manufactured goods)
Most Importantly, and this is the big Most Importantly - Customer Service
It don't matter what you do or make, if your service is shite the your customers will take their business elsewhere. (they will also tell 10 potential customers how bad your service is)
Put yourself in your potential customers shoes and ask the big question.
'If I could choose amongst these things that are of equal cost/value to myself, why would I choose yours'
Have pride in yourself and your business dealings, make sure that honesty and transparency are foremost of your concerns, if the product that the customer wants, in your opinion, doesn't match their needs then tell them, if they can get a better deal down the road for the same item then tell them, most customers will value your opinion and would rather buy from you than the shyster down the road.
Make your offer better
Which means better trained and paid staff (who value the business not just their paycheque)
As I said 'DON'T PANIC'
(hi alexander :)
We have traded our way out of worse messes than this and I'm sure we have been playing monopoly/risk/texas holdem for too many generations to let it get to us now. (Gordo has been quietly raising the stakes, presses are now on full tilt before johnny foreignor realises that the 500bn pound raise is worth only 12 euro)
This green and sceptic isle is more than capable of growing sufficient food to feed the nation, and can produce enough energy to satisfy our requirements, we just have to apply ourselves (something we have't been doing in coked up/cranked out britain)
Many Happy Returns Kiki
We have many magic and phosphurescent beans with which to trade
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This comment was removed because the moderators found it broke the House Rules.
#196
Why not internal combustion engines that run on methanol. This is nice clean high octane fuel that can be produced in a variety of ways but one example is by using the CO2 that comes from coal fired powered stations and mixing it with hydrogen produced by electrolysis systems driven by offshore wind..
Yes it's true we are good educators and we are very good at research.. Unfortunately we are generally rubbish at commercialising our research because we won't invest enough in it. So others come along and nick it leaving us with a warm "aren't we clever" feeling but not much that's tangible..
In Robert's new economy though we could have all financial institutions contributing to a national venture fund. What do you think ? 1% of turnover per annum maybe?
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@199
Yes live the high life but spend the money wisely, you personally will be responsible for the debt, that is you alone. However if you spend the money stimulating your very local economy then the people you spend the money with will feel some moral obligation to help you out in times of need (you helped them out didn't you), as they added work to the money you spent (ie created wealth) if they all chip in a bit of the wealth created to your debt you should all end up winners (or am I missing the bit about the bankers bonus)
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2009 will not just be about liquidity-short banks and the domestic debt mountain. Whitehall's left us an electricity generating shortfall, too.
Anyone remember the Winter of Discontent?
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At this time of goodwill to all men, drew_lg in 17 certainly enters into the spirit by wanting to execute the bankers who caused(???) the current problems. Just who are the bankers? There are so many generalisations when talking about the culprits and the solutions. And what about those in Govt, Parliament, BoE, FSA, China, India, Middle East, EU and, of course all those in companies and the public who lapped up the cash. Oops forgot to mention the media! Still, no more complaints about the country being overpopulated. Merry Christmas everyone.
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203 wrote
'Mostly our leaders are not corrupt, they almost all set out with our best interests at heart.'
Have you ever met a politician?
I've met several and to keep this blog clean I'll refrain from telling you the truth.
You are either Crash Gordon or high on drugs!
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149 is absolutely right when he questions how much the Govt knows but how little it is willing to tell us. Remember how Alistair Darling said we were facing the worst economic conditions for 60 years and got a good slagging from his Cabinet colleagues. Well the DT claims today that we face the worst recession since 1947. The worrying thing is that if AD was right what on earth has the Govt been doing in terms of a coordinated action plan. Clearly, it has little clue about how to get us out of the mess it got us into.
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206,
lol you obviously don't come on here often (and hence don't know me).
I don't have debt.
Merry xmas.
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As we come to the end of 2008 and the begining of 2009 it is time for reflection. I have only recently got involved with Roberts blogg, so missed a lot of the good work he did in reporting it as it is. I have been involved with issues around banks and the financial institutions on a personal level for the past three years and would like to give a small personal experience that sums up the whole issue regarding the crisis we all face and who we can and should trust.
In April 2006 the OFT issued a statement on late payment charges on credit cards, this statement also covered all late payment charges on all financial agreements. Any late payment charge above £12 would be regarded as unfair by the regulator. As would be expected all credit card providers droped their charges to £12.
I recently had a finance agreement end having paid back all the borrowings plus interest in August 2008, I knew I had late payment charges to come on this agreement, and for my sins knew that those charges would far exceed what the OFT would deem to be unfair. Low and behold I was right.
This was not a tin pot finance company, I can not name names for obvious reasons but I hope I can say the finance company are part of or subsidery of a bank that has taken tax payers money and is about to merge with another failed bank.
A total and profound indication that the banking system is above and beyond the law, and without any regard for their customers or the regulators. We have just given them billions of pounds of tax payers money and the government thinks they can trust them, THEY ARE NOT TRUST WORTHY, AND THEY DO NOT CARE ABOUT US OR YOU.
I face a legal battle against these perverse banks just to stop their debt collection agents sending bailifs to my door for money they are not entitled to, not because I want to get out of paying just to stop their greed and belief that they are beyond the law.
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@ javaman1984 #209
Yes personally,
(former MP) Sir Edward Gardiner, Tory, a very upstanding and what appeared to be incorruptible gentleman, I don't/didn't agree with his policies but he was man enough to stand up and say what he believed in
(current MP) Mark Williams, Lib Dem, A thoroughly nice chap, sincerely believes in what he is doing, again I believe this man to be a man of his word, thoroughly approachable, prepared to listen to other peoples viewpoints (no matter how radical ie. mine)
Both of these people are/were well meaning, socially spirited souls and I take issue with you casting aspersions on their characters, I may not agree with their policies but I will defend their right to have those policies as they would I believe defend my barking policies (I lie somewhere to the left of Marx and to the right of Hitler)
I have met top union leaders during the fight for a shorter working week (down from 39 to 37 hrs per week) something I believe in (I have productivity figures to prove it is better from an employers point of view) despite now having to work a 43 hr week myself.
All of the people that I have met and talked to have one thing in common, their own personal integrity
.
Don't believe for one moment that I would keep quiet if I had the merest suspicion to doubt their veracity.
I have nothing to lose or gain from this post, I have neither money nor influence.
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@javaman1984 #211
As you say 'I dont have debt' then you obviously have no belief in the future.
I have debt as I believe I can add enough value to my work that I can pay off my debt in the future, my creditors have sufficient belief that I can add enough value to my work that I can pay off my debt and so will lend me the money to create the surplus wealth through my work to pay off my debt, my creditors creditors (the shareholders) have sufficient belief that their representatives (the bank, my creditors) have sufficient nous to lend their (the shareholders) money to a creditworthy risk.
It is a belief system that makes the world of money go round, if you don't believe then the wheels come of the bus.
It is not he bankers that are at fault, it is the unbelievers, and believe in this, it is always the unbelievers who are first against the wall.
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I have to agree with alexandercurzon.
It seems US, and U.K economic managers have redefined the rules of fiscal responsibility.
When ever has an overly indebted individuals best course of action been to increase their debt burden.
I moved from the U.K to Australia at the end of 2005. We sold our house in the U.K close to the top of the market. This was of no great benefit to us as we were buying into a market here in Australia that was booming so it was a relative move.
Here in Australia the average lending to earnings ratio here is between 7 and 9 times.
The economists are denying any possibility of a housing recession pretty much as they were in the U.K during 2007.
I doubt their predictions.
There is only one course that the U.K and U.S (and additionally large parts of Europe) has set itself, devaluing debt obligations by inflating it away.
The U.S dollar and the U.K pound are in for some serious runs and confidence in them rightly waines.
The banks in the U.K are not secure. As has also been commented here by others, they have been bailed out for the problems they created for themselves upto early 2008. Their economic circumstances are worsening as the impact their troubles has inflicted on the wider economy put more pressure on their capital reserves. Banks always make losses during recessions. They are not capable of withstanding recessionary losses in their current state.
Yet more government money will be needed, which since they can not tax to earn, will mean printing more, devaluing the value of the pound, pushing up inflation both for imports but also for the money supply and general prices. This will cause an uncomfortable spiral which government will not be able to control.
The inflation jenie is not only out of the bag, he is partying.
It is already Christmas day here in Australia, presents are already open, happy children abound, I wish everyone in the U.K a happy Christmas, and that 2009 (despite my fears) is a better year than 2008.
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This government has no business plan. We bimble along as before and just borrow more and more to keep going. This is unsustainable. What happens when we cannot borrow any more?
The country spends far more than the wealth it generates.
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#18
I agree. When are these incompetent, over paid bafoons going to be held to account.
The game has been:
1.
Bluff your way into a job you have no skill for - easy to do since the bosses won't hire someone who knows what they are doing since no boss likes to be shown up as the know-nothings they are.
2.
Make as many mistakes as you like, no one will do anything about it. Might send you on a 'life skills course if they have a meagre amount of sense that something isn't quite right. ie, the subordinates are stressed and kicking up a fuss.
But you will never be fired for not being able to do your job. You will never he held to account for incompetence. You will be promoted. That phrase, 'promoted to his level of incompetence' has been around for years.
3.
Keep going, take the bonuses as the fools in the boardroom swallow up the drivel and tosh you feed them, all the drivel they want to hear, straight from the latest fashionable mangement paperback on sale at the train station.
4.
Retire to a mansion somewhere warm and sunny with all the money you know you didn't do a single decent day of honest work to earn.
When the 'old company' collapses, they won't come after you, so why bother. Except maybe to ask you to do it all over again.
Ronnie Biggs in Broad Daylight.
We've all seen it in our own jobs, one way or another.
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The point that Brown doesn't want to accept is that those responsible for the banking crisis (bank directors) and the regulators (FSA, FRC, SFO, Ministers responsible for FSA & FRC etc and auditors) must be held responsible.
If they are not, why did they benefit in money and status for so many years?
Their conduct was criminal.
If they were so ignorant what were they doing there in the first place.
Is there any evidence that they were totally ignorant or, did they suspect and expect something like this would happen?
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Hi Robert,
I fail to understand one thing, there has been a systematic downfall of all the major banking institutions in the UK, why is no one being held accountable for the same?
Its no where in the media like a full blown story everything is hushed up, considering the fact that if banks across the world come to know the state of affairs would stop trading with them!!!
If bankers have been greedy all the while what was the FSA doing? I am sure they had their vested interests in it as well.
The situation is really grim, the pound is falling with comparison to the Euro, why dont they just accept that the worse has happened and start building on it? What are they waiting for??
Its an appalling situation and I think the politicians need to do more. If Lloyds goes I think its only Barclays standing i.e. with regards to "UK" banks.
Is the government waiting for a disaster to happen before it gets more action in place? We need more money pumped into the market and someone to watch over all this till things settle down.
Eventually our earnings are degrading with a falling pound and its really pinching now. Guys please get your act together NOW!!!
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Wee-Scamp,
This is fantastic,
That people are are starting to address real enegy concerns on an "economic" web-page. The real education process has started!
I'm not an engineer (total respect to them). As a chemist I am still confident that there's still at least one Nobel-prize waiting for the person who finds a good catalyst for conversion of methane into methanol.
It won't cure the problem but it will help, maybe before the "hydrogen economy" comes about.
Meantime, when all the thermodynamic efficiencies are wrung from our carbon-based processes, and everyone bows down before the god of efficiency, the sign on the church door will say:
"Nuclear Power".
Of course, my prediction might be slightly wrong in terms of timing, but, ultimately, I know that the economists and politicians and pressure-groups will have made a good-living out of being far more wrong.
It's a good long term investment. Why don't we start it now, and concede that the French are ahead of us? It will produce jobs, wealth, and energy security.
Oh, yes, hands up anybody who has been hurt by nuclear power or knows someone who has been?
Now, hands up anyone who knows someone who has become ill through working in the coal-industry or oil-industry? (and in that last question I include anyone who might have fought in the armed-services in Iraq or other 'gulf' regions?
Thank you.
And a merry christmas, wherever you are.
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hi would like to speek to robert peston small buis FSA life of survival of the fits can you please call on [Personal details removed by Moderator]roger
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call me robert peston [Personal details removed by Moderator] roger
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Merry Christmas!
Robert, you say rhar we are the banks and that if the perceived credit-worthiness of our banks - with their trillions of pounds of assets and liabilities - were to deteriorate further, that would have an impact on the perceived credit-worthiness of the state.
With the assets (property) that started this mess in the first place in freefall and destined to fall further in2009 how can this not have an impact on the credi-worthiness of the state?
How can the banks lend prudently in a world of collapsing collateral?l
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Now that "wee" are thee banks ,perhaps the governmint would like to send us things can only get better persanalized stickers for our foreheads with the words " I am an AAA's hole ,deposits accepted and guaranteed by Gordon Gheko"
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The klepto inSantacide" things can only get better"" save the ponzi "mob now has the excuse to run off with rich mens toys and call it a fiscal stimulass.
Wee the general public pay for these spoilt brats ruining the show with their delusions of granderr , either way .
Dimmockracy needs a jester ,but there can only be"THE ONE"
Two years ago i was given a mug with a cartoon on the outside ,it depicted the proud builder of a sand caaastle admiring his completed work whilst a giant tsunami was approaching from the rear .
Inside the "mug" was the caption" hard work allways pays off"
I am surprized that the staffordshire potteries facing a downturn did not avail themselves of the opportunity to produce credit crunch cartoon mugs for the christmas market .
They would undoubtedly have become a collectors item TO COMMEMORATE THE AGE OF DELUSION the final outcome of the enlightenment .
The mug was given to me by an old Irish lady who said on other occasion "this generation of profligate fools will get whats coming to them wait and see"
The cogent observations of those not university brainwashed is telling.
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Lets see who's balls get the better of the wee Gordon Banks
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Commissar Peston
For your services to the Party the central committee awards you the journalist of the year award. In recognition of your role in the nationalising of the means of production, distribution and exchange.
Tovarisch Chelyabinsk
PS The UKFI, which is fulsomely praised in this article is headed (CEO) by one John Kingman, who is said by the Daily Mail to be the source at the Treasury of Robert Peston's scoops. They worked together at the Financial Times.
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The Pied Piper of Sedgefieild neatly stepped asside and joined the banks[that did the same] knowing that the Labour partees were "over" singing things can only get bet..........errrrrrrrrrrrrr
He must have looked over the edge and shouted "I will be with you allways[till the going down of the pun ]....but now that i'm a bankerr i dont give suckerrs an even break."Ask scottie and his start wreck clingon enterprize to beam you up to infinity and beyond.!
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The key question is, what happens if the markets decide not to bail out the UK by buying UK government (or UKIF) debt? Because it is denominated in a collapsing currency, and run by a Chief Executive with no knowledge of banking.
What does the UK do then?
It will be one of the Healy/Lamont moments.
The UK will be forced to join a currency and be ruled by a central bank that has credibility. So that rules out the dollar then.
This time the UK won't be forced out of the ERM but into it.
This is a more likely outcome than the nationalisation of the banks succeeding.
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228 I should like to point out that it is wrong to beam anybody up with or without their permission ,it being a complete waste of warp factor energy which should be left on standby.
The ratpack should be allowed to hit the Rocks ,they'll feel better for it.
Financial UK investment can employ whats left of them after wards.
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I find 214's comments utterly bizarre!
You seem to infer that I would be safe if I take a leap of faith (i.e. obtain wads of debt) and I will be fine. I’ve got news for you, I have no debt so i KNOW I will be safe’ish. I have a future but it does not involve debt, my skill set is very much in demand even today and the great thing is i get to keep ALL my wages.
I am amazed by your post, in fact it leads me to believe that soon you may have to speak to an insolvency practitioner.
Good Luck.
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Perhaps the most interesting question from all of this is.
Do the banks still have the skills to lend to viable businesses and home buyers?
Over the last twenty years banks have transformed their branch networks into shops selling financial services.
The Business skills that once existed at Branch level have gone. So the ability to recognise a viable business thats cash strapped, as opposed to a loss making venture running up debt, probably no longer exist in the UK Bank branch network.
Certainly the credit scoring systems that may have worked in the good times are inadequate now.
If banks are unable to do this more toxic debt will be acrued and this time there will be no easy way to "securitise it up" and pass the buck whilst also making one.
As Robert points out we are now so highly geared as a nation that any failure for banks to perform will affect us all.
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Happy Christmas!
Exclusions Apply:
GORDY
MANDY
THE TWO MILLY
And the REST OF THE GANG & HANGERS ON
YOU LOT MUST BE SO PROUD OF ALL YOUR
MESSIANIC GOVERNANCE.
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What is really interesting to me, is we have had one wave of overpaid experts, obviously the arrogant kings of the world types. They were know it alls that knew nothing, that is without doubt.
I read the column and comments because I see the same thing, loads of arrogant people making ridiculous predictions based solely on their own arrogance.
People never learn. I personally agree with those that liken this to the Chinese milk scandal and the Chinese response. I don't want an apology from a banker, they are hollow words from a sub human species. I want a full criminal investigation, the harshest of charges and the Gov to use the oppurtunity to take control from these parasites. This is not about money supply, you can always get money, it is a power struggle on the status quo.
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what we need is Confidence! Lack of confidence starts every recession and return of confidence will get us out.
Same every 10 years +- this time worse.
What we need is journalists, news reports to STOP telling us how bad it all is every day....that just fuels the situation and adds to the gloom = no confidence.
Peston and co revel in bad news and only make things worse.
Remember the press doom and gloom back in the 80s - that fateful weekend before the Monday crash!!
WE NEED CONFIDENCE and that will ultimately pull us out of this recesssion.
Peston and co simply make it worse!!!!
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#17, you claim banks have "lost more" than they ever earned... care to back that claim up with some actual real life numbers?
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What a 12 month!
What a 12 month.!
How deep IS the crisis,
'deep and.... (un)even'?
As a rough guide:
The crisis is as deep as the LEAST RISKY risks which now look irrational to take. (If 10 percent or more default chances look irrational at any price, it's a 90 percent crisis. If (down to) 1 percent risks look crazy at any price it's a 99 percent crisis. Etc. To date we seem to be in a more than 99 percent crisis. Foreign banks won't hold our currency even with one in a hundred default risk insurance)
If the crisis is as deep as I think it will turn out to be (far closer to 100 percent than it is at present), ordinary fractional banks will fold in the New Year.
Even wholly secured loan businesses can look bankrupt if the crisis turns out to be that deep. (And, as I say, I think it is)
Whether, in our case now, huge amounts of real economy bad news are required fully to realise the crisis isn't yet clear yet.
For, of course, these crisis can precipitate via pure financial effects, or more deeply, via changes purely in anticipation, in mood, in economic hope, in expectation.
Those who pulled the plug on the sub prime American poor, knowing it's domino effects (ie the hard nosed financiers) still have more plugs to pull, notwithstanding that their Republican cronies are being run out of town on a rail.
The deepest crisis will look more plausible if it comes with a President and Fed appearing to try to AVOID it from the start - and to be taking the right action
Here, of course, Mervyn will fight it with the 2 percent he has to play with, but so slowly (again) that you wonder.........
..........as do every Marxist and socialist who have ever talked with him
Personally I think he's found a way of and time for cutting rates that, via the exchange rate effects, makes matters worse, not better.
Another way of measuring the crisis is to ask:
What fall in asset values here, and demand for their output, is required to
a. mess up the OPEC oil producers?
(And the answer looks like 'Not much more than what we have already')
b. mess the newly emergent China and India?
And the qualitative answer to that is: falls so sharp that these countries must
A. divert economic effort away from selling us stuff
(Mandelson's continuous aim as Euro trade honcho and now)
B. re-sell, at knock down prices, the UK and US assets thay have acquired (from trade surpluses) in order to repay their scheduled capital account loans
AND THIS IS THE CRUX.
It happened to the 'Asian Tigers'... and Japan.... and Germany.... 'n' all.....
They capitalise up with Western technology and investment. The repayment schedules are absolutely rigid. They are denominated in real terms at historic prices. The short term trade surpluses with the West disappear, via economic crisis,and the overseas asset values crash.
Western capitalism thus has enjoyed a costless flow of goods from former colonies, defeated powers etc.
There is one other factor to put icing on the cake:
It's how you pull the plug.
The best way to secure the general collapse in confidence is via internal effects that hard nosed finance approves of.
Pulling the plug on the (otherwise homeless) poor who have had the temerity to try to buy a home for themselves, is ideal.
Now you see two things,
i. Why the authorities 'solutions' look so odd (slow and tangential).
ii. How unnecessary the crisis is. Never would a change of heart by so few have given so many so much relief.
Both follow from how valuable the crisis is to Western capitalism.
Lastly, the international interplay in our present mess:
Western orientated banks representing Japanese, Indian and Chinese interests refused the West credit. They thought they were being offered 'Mission Impossible' - style self destruct assets in exchange.
India and China will (and are) switch(ing) to much needed home infrastructure.
In the face of Obama's up - coming fiscal give away, will the contractionists still try to put the squeeze on, at home and abroad?
Well, yes. They have nowhere else to go, nothing else to do.
Will the fiscal packages work?
That depends entirely on the attitude of China. She could try to bring the West down (one can only hope).
What is clear, is that, given the new fuzzy Western politics (New Labour and inter-party Washington) contractionists can be found in many important official public positions, in politics and public finance, as well as everywhere, and at the heart, of Western finance and industrial capital.
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Merry christmas, money is our religion (US style).
If you speak to an insolvency practitioner you will need around five grand plus vat to keep breathing
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#235
I agree wholeheartedly.
The horse has bolted and the 20/20 hindsight experts like that BoE joker on Peston's Panorama Show are now out of the woodwork and retrospectively predicting doom and gloom.
Where were they when their "expertise" could have done some good?
Busy getting their share from the trough I suggest.
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The government shouldn't be running case by case bail out programs for companies: it should be creating conditions in which UK industry can be successful.
There are two big issues: first policy needs to fight the UK obsession with property investment by banking controls or tax changes which incentivise putting capital into exporting industries.
Second, there needs to be a credible threat of import tariffs at the EU level against countries which are regulating trade to guarantee advantage to their own exporters.
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Christmas Greetings to Robert Peston, the BBC for this facility, readers of this blog and last but not least the long suffering moderator.
To lighten the mood this Christmas it's time to see life from a different point of view. Economics is known as the dismal science, afterall.
So lighten up.
Try DB Boulevard, Point of View (You tube)
"Can't you see, life's easy, if you consider things from another point of view".
Happy Christmas, everyone.
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#240
But the Govt isn't interested in making UK "industry" successful. It is only interested in trying to return the banks and other financial institutions to their former glory and supporting retailers through VAT cuts and housebuilders by persuading the banks to lend as "normal"...
As far as real productive manufacturing type industry is concerned it could not care less unless of course it's a foreign company in which case Govt might provide some help to try to keep the jobs and the associated tax income.
Remember - Ally Darling does not believe in economic or industrial nationalism.
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242
I think you are right. Unfortunately, the Chinese, Indians, Koreans etc all do believe in economic nationalism and are playing by different rules in a lot of strategically important industries.
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lunc?
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Let's not forget Robert it was actually you who are partly to blame for the banking crisis. We need more regulation of the media in this country who cause such damage in our societies with their poison ink. Your agenda was not to seek the truth but to go on a ego crusade, writing your comments has caused many people to lose their pensions that were in the stocks of these banks. I wonder how many people are also thanking you for losing their jobs?
Your overzealous reaction could have been put better and you could have highlighted these facts to ministers with the contacts you have.
Your blog reports seem to tie in nicely just before the stock markets opened causing panic and scare mongering. If things were bad they were only made worse by your thoughtless words.
Still when you’re a son of a lord you don't have to worry when you have been born with a silver spoon. Congratulations Robert Peston. You mentioned in the recent panorama program that it was silly for the government to lower interests when the more prudent people had saved. But guess what these same people had money invested in the banks in a number of different ways and if the government had not reacted things would have been a lot worse. Lets take a vote on paying a TV license to fund such fools as yourself and see if you still have a job the week after it.
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people moan about the drop in the value of the £ compared to the Euro.
yet for many years our interest rate was usually 2% highern than theb Euro and befor that the the old German currency before the Euro was created.
our recent drops in the interest rate have now put the UK rate 0.75% lower than in the Eurozone.
this, in reality, means that Sterling has been higher than it would have been because of this premium we have offerred foreign investors !!!!
now it is those who can afford foreign trips who are feeling the pinch with their lower exchange rate yet our exporters have for goodness knows how many years fought for orders with a millstone round their neck !
I predict a further decline in the Dollar in 2009 which will lift the £/$ rate towards the $1.65/£ and also that Sterling will stay above parity with the Euro as the interest rate in the Eurozone comes closer to our own.
the shame is that so many of those who worked in manufacturing industry with the accent on exports have been sacrificed at the altar of financial services as the City spivs chased a quick buck.
2009 will be a bleak year for those who lose their jobs in the shake-out that comes from the excesses of bank lending and I wonder how many people here will declare that our Pension funds have lost significant sums in the recent scandal on Wall Street.
I can see a boost coming in those industries where an end product emerges, we need plenty new and re-furbished homes, any item that can be made here particularly food especially if it reduces airmiles and in making items already in use lasting longer, clothes, shoes, coats and the like.
the sudden slump in oil prices will reverse and the need to reduce our dependency on imported energy will continue unabated.
alas I can still see the short-termism of the City creating more volatility in their markets rather than buying shares for steady long term returns.
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JamesH SWAN POST 245
Whilst i am so admirer of the BBC
Mr Peston has seriously underplayed the
financial CRISIS.
Do you realise the whole CASH MACHINE
NET WORK was close to collapse in
OCTOBER?
Or like our Government do you stick your
head in the sand?
GET REAL CHUM!!!!!!!!!
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Yeah
Noddy Holder raised an important question last night on HIGNFY,,,,who has all the money the banks and financiers have lost? Where is it?
I've not read or heard a cogent answer to this query?
Its strangely liberating this financial crisis, especially for those who did the right things (saved, paid off debts, did'nt go wild on the credit). If I lose my job or house, I can legitimately play the blame game; not my fault guv,,,,I don't give a damn. Maybe dangerous for the precious social order that!
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#116 Chazhead
The problem we face is that if things get really bad we will have mob rule and no amount of personal planning will stand up against "we got a gun and you aint". However, things will probably just get progressively worse and more expensive.
A few things to do which will help you feel better (they do for me anyway).
1. Yes, get a stock of food in - there are many problems which we could face which will cause panic buying and emptying of the supermarkets.
2. Keep youself fit and healthy.
3. Find some means of defending yourself (seriously, I plan to take up archery).
4. Grow your own food, make sure what you buy is in season and locally grown. Avoid supermarkets where possible.
5. Seriously look at making your house energy efficient and diversify heating and cooking so you can live through the power cuts. We have just had a log burner installed. Use local tradesmen to fit it.
6. Get involved with groups in your local area, especially schoools. When the kids grow up they might be less likely to mug you if you have treated them well.
7. You could consider moving to a house which is well fenced in.
Basically, if you plan for a return to the fifties and live as sustainably as you can, you will be able to feel smug, will probably save money and could live more comfortably in the future.
Personally, I am paying off as much mortgage as I can, and not making financial plans until the dust settles.
Other than that take pleasure in each day and don't waste your life on blogs.
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#218 mogren
"Is there any evidence that they were totally ignorant or, did they suspect and expect something like this would happen?"
The events are the evidence.
Those who should have seen it coming are:
UK:
HMT Inspectors
Internal Auditors
FSA
External Auditors (usually with conflict of interest)
Credit Rating Agencies
USA:
Fed Reserve
FDIC
SEC
Credit Rating Agencies
The derivatives, SIVs, CDOs, CDS and other instruments are a stack of cards.
The regulators may have been ignorant (lacking in knowledge) or they may have been negligent but they are all paid to spot these things.
Hopefully we shall see some cases brought about due diligence.
Merry Christmas
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#243
Actually as well as the Chinese, Indians and Koreans I'd include the Americans, Canadians, Brazilians, Spanish, Germans, French, Italians, Norwegians, Russians, Finns and Swedes and just about every other country that has any sort of engineering/techy capability.
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If oil is running out and the cities are jam packed with polluting cars, why do we need to save the car industry.
Would it be better to invest the money in better methods of mass transport. It would create more jobs, less pollution and a better future for us all on the planet.
Go for it Gordon.
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I cannot believe Gordon Brown, as and ex chancellor, has not learnt from the "house of cards" that is the banking and investment industry that has virtually collapsed. I listened to the interview with Leon Halligan on the Today programme and agree with everything he said.
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If the USA is bankrupt and their economy is down the pan.
Why is the Dollar so high?
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I cannot believe Gordon Brown, as and ex chancellor, has not learnt from the "house of cards" that is the banking and investment industry that has virtually collapsed. I listened to the interview with Leon Halligan on the Today programme 24th December and agree with everything he said.
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"who has all the money the banks and financiers have lost? Where is it?
I've not read or heard a cogent answer to this query?" - RevolutionaryBum
You're making the understandable mistake of thinking that money is real in the same sense wheat, oil or machine tools are. It isn't: in one way or another, it's all based on people believing that it will obtain them these real things. That was true even when money was bits of gold and silver, the value of which derived largely from the fact that people wanted them because they believed other people wanted them, and would go on wanting them, because these other people in turn believed...
When people, for whatever reason, start doubting the value of particular forms of money, that means there is simply, less money. So the money has gone to the same place that all unkept promises and unrealised dreams go.
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"It means that if the perceived credit-worthiness of our banks - with their trillions of pounds of assets and liabilities - were to deteriorate further, that would have an impact on the perceived credit-worthiness of the state."
Well Robert, I'm quite sure that the government did a full audit on the banks assets and liabilities before deciding to invest in them. After all Gordon Brown is a model of prudence and wouldn't have risked taxpayers money on a pig in a poke now would he?
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2#
In the previous 10 years to the 10 you mentioned was Debt to GDP ever below 40%?
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258. At 9:18pm on 25 Dec 2008, BillieBson wrote:
2#
In the previous 10 years to the 10 you mentioned was Debt to GDP ever below 40%?
+
Actually I was talking about my own personal debt for the last 10 years.
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100% gross personal income
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"who has all the money the banks and financiers have lost? Where is it?
I've not read or heard a cogent answer to this query?" -
The money literally went to the owners of the assets sold which means it was eventually absorbed into the world money supply.
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Money was invested in Paper Assets worth were 50 times what they are now. The money from the original purchases migrated to america, the cayman and channel islands.
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.. additional credit was obtained for recovery investing to recoup losses and liabilities, which also went pear shaped.
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from a legal point of view our money is now out of jurisdiction and can't be touched.
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from a general point of view companies such as hedge funds, dotcom, computer chip manufacturers, bio-techs, mbs etc. which showed massive growth then boom and bust, were probably the dodgiest.
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One prick with Brown's rusty nail, and the bubble has burst... It will take a saviour greater than He to save us from bedlum next year, now... Long live Teflon Tone... Happy Xmas...
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Robert,
While you are enjoying a seasonal respite from a hectic year in which you have done a great job in highlighting many of the issues of this crisis, I think you could do us all a favour by devoting some of your time to an interview with Chris Martenson which is reported at length ( 57 minutes) on the following web address
http://globalpublicmedia.com/reality_report_chris_martenson_on_the_current_financial_crisis
There have been a number of references to Chris's work in the comments on your blog, particularly referring to his Crash Course which brings together Economy, Energy and Environmental issues, all of which need to be considered together if we expect to climb out of this mess. Chris has an ability to explain things in a very down to earth understandable way, which seems to me to be entirely plausible.
It would certainly push the debate along if you could cast a critical eye over what he is proposing, which is totally at odds with the current spend spend approach of both the UK and USA governments.
I'm all for swift decisive action, but only if it is backed by well developed logical reasoning and I have seen no sign of this so far from the powers that be, on either side of the pond.
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Robert, are you aware ?
The next big problem is going to be when the US interest rates on all of the longer term adjustable mortgages re adjust over the next 3 years. That will create a whole wave of new defaults. Some of us who predicted the current situation think we're just at the tip of the iceberg.
Check it out !
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For the 90% plus of those who want a job still having a job, next year will probably be quite good (two caveats - not if you need to sell your house and not if you need to purchase an annuity). The reason is interest rates are low and will feed into the real economy through much lower inflation. Also the tax cuts and increased benefits for pensioners will also have a positive effect.
Despite the doom sayers, a group somewhat over-represented on this blog, the recession will not lead the wholesale collapse of capitalism and society - it will be a recession, nasty for those who lose their job, but similar to previous recessions. The UK will still be one of the richest countries in the world, a position it maintains through trade and the skills and experience of the citizens. The real danger was that collapse of the banks would lead to a major world wide slump - prompt action especially in the UK has managed to avoid this threat.
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This comment was removed because the moderators found it broke the House Rules.
"The real danger was that collapse of the banks would lead to a major world wide slump - prompt action especially in the UK has managed to avoid this threat." - stevenpalmer
It has been averted for now, but it's clear the banks are not lending the funds that have been pumped into them to any great extent - hence the wave of bankruptcies and threatened bankruptcies in manufacturing and retail businesses in the US, UK and elsewhere. The threat of a world-wide slump remains.
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269 Stephen Palmer
Richest country in the world? I love your sense of humour! Very dry!
We are so close to bankruptcy, we are 'iceland in waiting'!
we have no reserves and our printing presses are running at fantastic speeds to keep pave with our government burning money!
We have no exporting Market to speak of, and no strong manufacturing base.
Our shops sell imported goods as these ate cheaper than our own.
The only way of getting investment in large chunks in the short term is to raise interest rates and attract foreign money.
Then, to make a sustainable economy we need to build an exportable manufacturing base. This won't happen overnight, and not until the government see the future and not the present.
Quick fixes won't work. The banks will need more money soon-libor is dead.
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talking of libor rate-it's down a hell of a lot-overnight and 3 month.
We approached our lender as our mortgage rate is linked to it, and advised them our mortgage should be much cheaper.
Theyfinally wrote back and advised a massive reduction to be reassessed in 3 months.
I wonder how many other mortgages linked to the libor rate should have come down but haven't?
Another way banks of getting money it seems!
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another nugget for digestion..
Barclays are moving their account opening services and Internet helpline back to the UK from Mumbai!
Hurray! May all other customer service centres follow suit! Employment prospects will improve for those currently out of work.
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and apologies-stupid phone makes odd words-pave = pace and ate = are!
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# 269 stevenpalmer
I'm sorry, sir, but you're deluded and need, if I may say, to research this crisis a little more. The difficult issue is research indicates that so many people still think like you.
Take a look at this:
http://tinyurl.com/9akxeb
The problem we face in the UK is that when the economic tsunami hits (for it will), many people will be shocked, angry and unprepared for the conseqeuences. I fear that you fall into this category. The potential outcome - that our politicians now fear more and more - is a rapid and unexpected deterioration in social order.
That's why a lot of what we're hearing from our political elite is disingenuous claptrap. Our politicians are rapidly becoming guilty of neglect; they should be preparing us for very difficult times ahead and stop trying to kid us that they're on top of events and that things will not be as bad as they seem. Their actions are self-centred and designed to keep them in power and all of the trappings that go with it.
Unless/until a political party indicates that it is prepared to acknowledge the dire situation ahead of us and, moreover, indicate how they intend to lead this country through and out the other side in one piece, I'm adopting a strategy of self-reliance for me and my family.
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Uhm - how many Banks are there in the UK?? We put money into four of them - wow and you think that the system has been nationalised.
Th Banking system was NOT saved - the economic system of the UK was saved - but perhaps you don't feel that was worthwhile! Please remember this is not a UK crisis it is a global issue.
Bank lending to SME's in 2008 is at the same levels as 2007 and that is part of the problem. Many small businesses are being kept afloat by the Banks. Many of these businesses are poorly run and should be allowed to go to the wall.
I run a business and find no problem what so ever with my bank (Barclays). Perhaps we should look to ourselves before rushing to blame others?
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So here we are in the closing
days of 2008,the financial crisis
has been in the public domain for
16 months.
STILL there have been no
prosecutions of the people that
caused the mess.
We still have a
Government in DENIAL.
Whats even more BIZARRE they
claim to have saved the situation
and that the World will follow!!
HOW DELUDED?
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I hope I can be forgiven for the following, it's length and antiquity etc., but in reading message #265, I felt a blast from the past would be appropriate.
The following was placed on a BBC blog page in May 2006,.....
I see there is a move from certain quarters to rein in the hedge fund operators(speculators to a man).
The reason being, it appears that they are the ones who are, and have been, driving up the cost of everything, by creating false commodity shortages. The prime example quoted being the rise in the cost of copper, which has gone up, with assistance of either producers or consumers, from just over $1700 per tonne, to well over $7200 per tonne, just over the last few months.
The fact is, that for many years the price has been set between producers and consumers by means of the well tried 'supply and demand' regime.
Now it seems hedge finds are taking up
options on a forward price basis that is effectively cutting into the well established method of business, thereby causing ever upwards price inflation.
None of which is due to supply and demand, just to that old Bogey ....GREED!
There is a long list of commodities that have suffered similarly, coffee, steel, and many more. All driven sky high in price by these parasitical hedge funds.
The worst of course being OIL. Look what that has done to us.
The above is about one third of the actual message posted at the time.
26th Dec...2008
Housing on the other hand, has been tolerated to escalate on the basis of the choice of the individual likewise being greedy.
I bought two terrace houses, next door to one another, for the sum of 10k Pounds the two, I have spent the last twenty five years putting much of my earnings into refurbishing and modifying them in to one unit.
I guess I have laid out about forty five thousands all told, and feel extremely self satisfied that my once itchy feet stopped itching around 1983.
Last year the house next door sold for 130k, the same house that sold a few months after I bought mine, for 3300 Pounds.
The person who paid that sum did virtually no serious work to bring it beyond it's original as bought state.
Effectively allowing for inflationary factors they sold for a profit margin of some 120k
I have been called a fool for not separating my larger house, back into two properties, and selling for a similar profit , however I am not greed orientated, I leave that to the true fools of this nation's, those who now are on the skids with their overburdening mortgages, their credit cards debts and loans and second and third mortgages to worry about.
That was the situation all over Britain in the pre credit crunch couple of years.
I note that some refuse to allow Thatchers years to be castigated, well I do so castigate her regime for opening up the floodgates of property price escalation, and then doing nothing to curb the vast profits being made from the sale of El cheapo housing, including council houses sold at well below any reasonable market value.
The banks and building societies were quick to jump on that frenzied bandwagon, and today is where we are at through it all.
"Greed is good" Thatchers lot said, how the herd fell for it, and I have gone very deaf to all the crying and wailing emanating from those who were daft enough to fall for the propaganda spouted in the 80's and 90's.
Blame Brown all you like, but it's not easy to unravel the financial ball of string once everyone believes it to be the way of life.
Or, as someone else has stated, getting the Genii back into the bottle.
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Why can no-one in power see that it is neither sensible nor desirable for lending to remain at 2007 levels and prices? They are quite literally sucking out the life-blood of the country.
I am 28 with one child, and above average income, two professional qualifications and a masters. I should be feeling that the whole world is my oyster. Instead, I am facing the possibility that not only am I going to get hit with paying for my life, but also that of my parents whilst they get to maintain the standard of living that their debt has bought them. My parents are sitting in a five bedroom house that they can't pay for whilst I can't even afford to get on the property ladder. Whilst life may not be fair, I don't particularly want to be doing this.
I am already considering emigrating. And I think its fair to say that I have more potential opportunity than most. If I, and people like me, emigrate, this country will not be able to survive under the weight of an increasingly aging population with more and more say. Eventually, they may find that they have a whole load of control over a whole load of nothing.
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Re: 279
What some investors do is buy land and when the price doubles they sell half to recoup their total outlay. (i.e. get 50% free)
(I developed my own 60% rule - if you achieve 60% growth you sell 60%. I.e. you get 96% of outlay back excluding charges, i.e. get 40% free)
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like all you addicts, I was trying to be on holiday and forget this debacle for a couple of days..... but couldn't resist.
The problems we face need to be seen in a wider context. The bankers and politicians are certainly the most shamefully guilty, however for the past two generations our UK economy has been driven by accountants, when it should have been driven by engineers.
I stand to be corrected, but probably when Harold Wilson & Denis Healey started twisting the tax-system, all companies above a certain size had to start playing a new game of massaging money and avoiding tax. Accordingly they built huge internal departments devoted to that end, evolving into an obsession with manipulating numbers to help the share price and ignoring core company values such as R+D, new product lines, capital investment in new equipment. Because they had the time and the inclination they took over the management of these companies. If you look at the boardrooms of the top 350 UK companies, they are all dominated by accountants
But the world we are going to have to compete in from now on however, is one where IDEAS (aplogies, can't find italics) are king.
To paraphrase what one poster said earlier, we still have the best computer brains, architects, designers, engineers, scientists in the world -despite a crap education system and too many university students.
If we invest in these people and reward their companies with tax-breaks, they will pull us out of this mess more comprehensively than any financial engineering ever could, and we can compete with the rest of the world.
Remember this is a brand new lower division that we have been relegated into..............
time to wake up.
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I would like to start up a SME and then sell it
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GDP shrinkage up to 10% ?
Shrinkage of TAX REVENUE by
23%
Estimates for 2009.
So its a DEPRESSION GORDY.
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"Schadenfreude ist der schoenste freude..."
Some 10 years ago, shortly before I gave up dreaming of a decent job in the UK and left, I was told by a young high-flying accountant that there could never be another crash because all our financial institutions were SO sophisticated. I really would like to see his face today.
I am no economist, but I could see that the writing was on the wall years ago. At that time I was working on a telephone hotline and renting a room. Just out of interest I asked my bank about a mortgage. They told me that providing I'd been in my work (even as a temp) for 6 months, they would give me a 100% mortgage. Or more. When I queried this, they told me it wasn't a problem; the property would increase in value, and even if it didn't, the UK was the world's most sophisticated mortgage market, and anything was possible. In other words, we have lots of jolly clever financial whizz kids working for us and they can turn black into white (or red into black). My background is history and if there's one thing that history teaches, it's that anybody who thinks he's so clever probably isn't. Institutions doubly so.
If 2009 is going to be as bad as predicted (or worse), then perhaps those poor, unemployed bankers, accountants and other financial workers might find the time to read Nietzche's "Zarathustra" and contemplate the difference between the Ultimate Man (who is sure he knows everything) and the Superman (who knows he does not).
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276. At 09:48am on 26 Dec 2008, moraymint wrote:
The problem we face in the UK is that when the economic tsunami hits (for it will), many people will be shocked, angry and unprepared for the conseqeuences.
+
will it be like an underwater nuclear bomb?
(consequences)
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Re #282
The rot with accountants started in the '50's. As an example, while the story of the demise of the Briish motorcycle industry is always cited as an example of the labour and management problems of British industry, the part played by accountants tends to be overlooked. I have personally talked to engineers who had their designs scrapped because they could guarantee either race wins or x% increase in sales volumes. Saying the odds were very good wasn't enough. If the engineers could promise a return, it was not good enough for the bean counters, so a great many promising new designs were scrapped and/or were adopted by foreign (inc. Japanese) companies. The rest is history.
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This article come across as a little supercilious with it’s populist rallying call of “all us poor taxpayers together”. And how so many have jumped on the bandwagon, one wonders where they have all been during the good times of the last ten years. I suspect most have been sitting back reaping the financial rewards of a thriving economy whilst neither understanding nor caring about how that situation was being achieved. And now that life has a gloomier outlook they are attacking those in the financial industry for doing exactly the same thing.
Let’s look at what the taxpayer, as represented by the UKFI, is actually doing to ensure that credit lines are being made available to small businesses. Well they are certainly saying the right things publicly but are also expecting the bank’s to follow their urgings with one hand tied behind their backs. With the capital usage and liquidity restrictions imposed as part of the bail-out agreements the Government is employing the usual trick of giving with one hand and taking with the other. It is telling the banks to lend but only allowing them to do so in certain circumstances, typically an existing business which has years of profit growth behind it and has twice the value of security available that it had to put up this time last year.
This exposes your comment about “stupid loans they made in the boom years” to be one based purely on your usual obvious hindsight masquerading as insight. What would two years ago have been a sound loan supporting a well run business would now be almost impossible to contemplate. So if we are to return to the lending levels of 2007 it certainly cannot be on the same terms.
In the fast changing world that we now find ourselves it makes little sense to base tomorrows decisions on the opposite of what hindsight, and political commentators, tell us were yesterdays mistakes.
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#279, So lets get this right:
Thatcher spent like crazy for the last 8 years? Thatcher kept interest rates artificially low causing a debt bubble? Also causing savers to pull their money out which in turn forced the banks to rely on wholesale markets - note the BBC never points out WHY the banks became so dependent? Also causing a search for yield in investors which fed the CDO bubble? Did Thatcher ignore at least 4 warnings from Vince Cable - whilst ridiculing him for making the warnings? Did she ignore at least 6 from the IMF? Did Thatcher boast about how in any other decade this continuous growth would have ended in a housing bubble and that this was different( Brown did in 2005 )? Did Thatcher fiddle the inflation figures to cut out housing costs? Did Thatcher build up a record deficit - the highest as a percentage of GDP in real terms for 40 years?
Finally, Brown has been in charge of the economy for longer than Thatcher. If she really did so much damage, you think he would fix it. After all she managed to end all the damage the previous Labour governments had inflicted on the UK.
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#285, the people who deal with the origination of mortgages are chimps reading off a script - as you apparently worked in such a telesales job you should know this. They have zero idea of how the mortgage market works and who their bank finances the loan.
Wierd how everyone seems to have been a genius in hindsight. Or maybe that is too cynical of me?
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We all agree now that capitalists would destroy themselves (and us) if we leave them to it.
Now that we know that they need a lot of hand-holding, we should make sure we extract a fair price for the costs we incur.
Turning that basic objective into policy is the main problem. Free-market economics has been comprehensively trashed, but what form of social engineering will we eventually settle on?
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#63 moraymint
I know I'm a bit late - but it's Vince Cable - if only he would 'just stand up'!
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Oh dearie me, so much Christmas cheer on this thread and little understanding that alcohol is also a depressant.
Some good thoughts and so much incoherent rambling and fear.
The fear brings me back to late 1973 after the oil crisis when navigating my car across the Fens from Peterborough I concluded that life would never be the same. Yet, the reality was that my life would never be the same. For the generality it changed little. The world failed to change but I did. I went to cash.
Since then my view has been rubbished by established opinions many times, but yet again the survival strategy has worked.
In four years time I hope to retire. Will the strategy have worked?
This is the big question for which I have no answer. My pension fund has been raped by this government, now my savings are being raped by the government, and I have no doubt that my mortage free property will be stuffed by huge increases in the Council Tax.
This might be cause for concern but for one exception: to me the enemy is quite obviously the policy of the government.
Whatever wealth I possess this government will seek to expropriate it as forever it breathes the lie that the goverment is the people. The state can never be the people as it is nothing more than the living expression of the ruling caste.
Given that it was the bankers who first went bust despite their privileged status within the economic order as `the financial service industry' then one has to ask how long before the emperor is seen to be naked?
The economic and political system has failed. The structure is in flux and we, the taxpayers, can lay claim to tomorrow.
So what is happening?
The hoi-polloi are being encouraged to rush out and spend in the shops. Indeed the government has cut VAT to facilitate that activity. Such delusion! This is where the Yanks were twelve months ago: last month they had another 500,000 unemployed. They are a year ahead of us and are in deep recession. We are to join them.
So what does the future hold? The continuation in asset value collapse. The continued failure of otherwise sound businesses because they cannot maintain sufficient funding, the downsizing of profitable businesses because they need to stay fit, unemployment to rise and repossessions to rise.
When will it end?
Hopefully the end will be in sight by the middle of 2010, but remember the recovery will be slow, strained and very, very long.
As for the government there is so much it could be doing but fails to do. What we have is a political structure devoted to its own survival through the funding of its own client-class. This is what we have always had. Perhaps it is time for it to change before it destroys us all.
I have reflected above that to revert to the streets is a sign of failure. I repeat that injunction. To prevent such foolishness I suggest that we all in small ways and large set out to argue against the powers of this government. This government is not fit to rule, has no right to rule and must subject itself to the authority of the nation. Why continue to respect such abject policy failure?
If, as I believe, this government is too fearful to call an election then I call upon the government to seek a coalition of all the parties and skills within the country and set out to form a government of National Unity around which we can all rally and seek a new consensus to take our nation forward.
If Mr. Brown considers his career more important than the well-being of the country at large then he will become, as another poster has remarked, as cursed by history as that fool Neville Chamberlain in 1940.
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# 289 laughingblacksheep
Nice one! Check this out as a brief, clear and accurate resume of Brown's breathtaking mix of arrogance, deceit and incompetence:
http://tinyurl.com/8g48q2
I fail to see how anyone these days can possibly say a word in favour of Brown. He's been rumbled like no other politician in recent memory for what he really is: a complete and utter fraud.
It's shameful that Brown continues to believe he's the saviour of the UK (not to mention the world) whilst our so-called democratic political system limps and falls about all over the place, apparently unable or unwilling to oust him. Who on earth do our politicians think they answer to right now? And how come so many voters still think Brown's the right man for the job? What on earth do they know that I don't?
We may as well be living in a dictatorship for all the say you and I currently have about what politicians are doing in the name of "saving the economy". All semblance of checks and balances has flown out of the window (well, out of the Palace of Westminster actually) whilst the government hides behind the facade of a phony blitz mentality.
I never voted to have billions and billions and billions of MY cash (and my children's earnings) thrown at a corrupt banking system in the name of saving the world, whilst Mandelson ponces about contemplating throwing even more money at the dinosaur car industry (again, as if the money's his own). It's all becoming the economic law-making equivalent of martial-law and I find it desparately frustrating and downright scary.
Brown and the rest of our political elite are playing with fire. They're going to need to be very careful indeed about how they play out their roles when the economic tsunami crashes into the UK during 2009.
More so now than ever we need to see democracy in action - if we're not to witness Brown's latent fascism break through his veneer of competent decency and allow us to experience its effects at first hand.
Having policemen crash into parliament to search an MP's offices whilst being secretly wired to record conversations is the shape of things to come; this is how the real Gordon Brown likes to get things done.
Be warned.
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"Thatcher spent like crazy for the last 8 years? Thatcher kept interest rates artificially low causing a debt bubble?" - laughingblacksheep
She (and Reagan) established the religion of market-worship that Blair and Brown have followed uncritically, and that has brought us to the Great Crash of 2008. She also destroyed much of British manufacturing industry, leaving the country with permanently high unemployement, and over-dependent on financial services; and by selling off council housing, she greatly increased property price instability (a reasonable proportion of rental property tends to stabilise these prices by providing an alternative people can turn to if they are too high).
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#289 laughingblacksheep
"Did Thatcher fiddle the inflation figures to cut out housing costs?"
No, she fiddled the unemployment figures.
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The banking system may or may not be able to lend fresh credit to companies for investment or individuals for mortgages. More crucially how will they react to companies breaking their banking covenants; will they take a short term view and force a company into bankruptcy or will they take a longer term view and accept a status quo in the expectation of the economy recovering?
Take the car industry which has been the first to feel the effects of the insecurity created by the credit crunch: Industry wide the fit and the not so fit companies have suffered a reduction in turnover of 30% to 40%- which is catastrophic for any business-this reduction has been fed straight onto their suppliers, all of whom have bank loans. Those loans are based upon certain levels of profitability and turnover, which are currently no longer being met.
So what will the banks do when the loans are due for renewal, or are subject to review? Worst case; they will not renew the loan thereby forcing an insolvency. More likely they will consider the risk to be higher and will increase the rate of interest, adding to the companies woes. Or maybe if the UK Financial Investments Ltd works as it should do, the view adopted by the banks would be benign; companies will resume leasing new vehicles, cease extending old leasing contracts, individuals will recover their confidence, and will avail themselves of 0% finance deals, which will lead to more normal levels of production for the car industry.
Is the spin effect created by repossessions and company insolvencies now taking hold, creating its own recession? Thereby reducing the levels of credit in place, or can in the short term the current levels of credit be maintained in the expectation of economic activity picking up?
Whichever way it goes the attitude adopted by the banks will make the difference between a short sharp period of insecurity reflected by a downturn in investment, and a full blown recession.
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Hope we don't go back to indentures. An indentured servant is a form of debt bondage worker. The laborer is under contract of an employer for some period of time, usually three to seven years, in exchange for their transportation, food, drink, clothing, lodging and other necessities. Unlike a slave, an indentured servant is required to work only for a limited term specified in a signed contract.
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Careers are out of the window now, it's about paying bills only and staying in employment, for less disposable income with little or no savings.
10% wage cuts are significant reductions.
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kikidread@298,
After the very obvious failure of the "free-market" religion, I fear something like indentures, dressed up as a new paternalism, may be what big business goes for - it worked for a long time in Japan. After all, the alternative could be the spread of democracy into economic life - and that they would find intolerable!
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300. At 10:14pm on 26 Dec 2008, Nick-Gotts wrote:
After the very obvious failure of the "free-market" religion, I fear something like indentures, dressed up as a new paternalism, may be what big business goes for - it worked for a long time in Japan. After all, the alternative could be the spread of democracy into economic life - and that they would find intolerable!
+
Does the state own us? If we don't register births of our children then they are free, but apparently thats illegal.
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#250 thank you for your reply. I was suggesting that the bankers and regulators be held accountable and not be allowed to walk off into the sunset. They were being paid millions to be competent and responsible.
Like #294 says, neither he nor anybody else agreed to his wealth being raided by the incompetent and worse.
So this brings me to my other point. What the bankers did was not possible without the politicians.
I believe that we have had three dictators in the last 30 years. Thatcher, Blair and Brown.
The formula is simple. The politicians do not listen, they are not open to persuasion and they don't answer your questions. If you become violent they bang you up. That leaves just one way to beat them. Keep asking questions and keep demanding answers. In the end I believe there will have to be violence and they must them initiate it.
As long as we have the pretence of democracy, the only thing we can do is ask questions and demand answers.
As things stand, I do not see any diference between the UK and Zimbabwe.
Please remember, no violence.
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RECENT REPORTS ON THE TV AND IN THE PRESS INFORMS US THAT THE BANKS THAT HAVE BEEN BAILED OUT BY THE PUBLIC ARE PAYING OUT VAST SUMS TO SOME OF THEIR EMPLOYEES AS BONUSES.
WHY.
were they contractually bound to do so and if so HOW
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Robert, Can I say Thankyou for the great posts you have done over the last year since Northern Rock.
Keep up the good work .
Merry christmas and a happy new year to you and your family,
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302. At 10:49pm on 26 Dec 2008, mogren wrote:
As long as we have the pretence of democracy, the only thing we can do is ask questions and demand answers.
As things stand, I do not see any diference between the UK and Zimbabwe.
Please remember, no violence.
+ actually the system is there for your benefit. Work with(in) it to complain about incompetence and fraud
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So instead of banging on about the FSA on Rob's Blog complain to them directly
http://www.fsa.gov.uk/Pages/About/complaints/index.shtml
you may not get anywhere and there is a backlog
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@ mogren
"I believe that we have had three dictators in the last 30 years. Thatcher, Blair and Brown."
Of course. We have an elective dictatorship - that is our system.
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#305 & 306.
They ignore you. I have been asking them questions for years. The system is not there for my benefit, it's there for the pretence.
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308. At 00:46am on 27 Dec 2008, mogren wrote:
#305 & 306.
They ignore you. I have been asking them questions for years. The system is not there for my benefit, it's there for the pretence.
+
yes I know but I work on the principle of one complaint a day to feel better. I've gotten good at complaining. olympic standard
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"As things stand, I do not see any diference between the UK and Zimbabwe." - kikidread
That is not only stupid, but highly offensive.
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I didn't say that nick-gotts mogren did.
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To me, eveyone is missing the whole point.
Its not 'blah-blah' about money, or 'blah-blah' about the entities that make up things such as 'creditworthyness' etc etc and all the other hype that you try and scare people with.
It all comes down to how you live your life.
This global 'nonesense, and it is 'nonesense', will have a bearing on an individuals life.
But much less so than those who are involved directly, by a war. Or the eroding seas. Or a tragic accident. Or the loss of a family member.
Its is NOT the end of the world, merely a downturn of a less important variable of life, that has always existed, and, quite frankly, with much less direct effect, than what has gone by when you look at history in its entirity.
If you want to see 'civilisation' as it has been created as it is - that is with complete fake ideals and fake morals (this is NOT anything to do with ANY religious views) - then YOU choose to live by it.
For anyone with an ounce of sense, this is an inconvenience much less powerful than those listed in my fourth paragraph, which have also always existed.
Don't live by the rules that others create for you - do your own thing.
Analysts, money men and the like - you really need to get over yourselves - how you afford to insure your next top-of-the-range car is of no importance to me, when it goes astray.
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Remember, money, like time, doesn't really exist anyway - its merely a measurement decided by faceless people, on a quantity that no one can really control.
A Van Goch can go for £20m for all I care - I literally would not give tuppence for it if it meant I never, ever see it - even if I agreed to such a financial system - simply because it does not warrant the money / time of my life. Spending time with people I love, does.
Money, and everything that goes with it, is not 'the root of all evil' - it simply does not exist, despite what anyone says.
Thye real value of life, is what you can enjoy in the short time you are here.
Forget the inconvenience others try to impose, and if necassary, ignore those rules that are said to be 'important' - they can't be that 'important' if the whole thing doesn't exist in the first place!
Inflation. Capital. Bonds. Credit. Debits. THEY DON'T REALLY EXIST - they are merely figments of other people's imaginations - that the majority of people subscribe to - when you don't have to.
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#291, when exactly was there a free market in the UK? You have any idea what Brown's government - or that matter Thatcher's - spent as a percentage of GDP?
As for "social engineering", you pulled some sort of Rip Van Winkle for the last 11 years? What the hell do you think Brown spends his day doing? Why do you think the tax code has grown by over 10 times?
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#296, was that to be some sort of comeback or where you simply agreeing with me?
As for complaints from Lefties to non-Lefties about fiddling figures.... something about throwing of stones in glasshouses. We did seem to get an awful lot of "long-term sick" at the same time as the unemployment figures went down. Of course a cynic might claim that Labour pervasively lies about any statistic....
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#294, I should point out that I no longer live in the UK, nor pay taxes there nor have assets there so none of MY money is going anywhere.
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'GDP'. Another completely fabricated word, for the pur fabrication that is 'money'.
Tell me - what makes a Brit or an American's physical effort, worth 200 times that of an African's?
Only 'money' can do that.
A purely imagined value, based on nothing (actually, based (very loosely) on how much gold a 'state' has).
Remember that, when you next go to work - 'my work is worth 200 times that of your average African, because the US has lots of gold in its vaults - some that we used to have till Gordon Brown sold it off.'
One more time - MONEY - and therefore the entire 'financial system' surrounding it, including words like 'GDP' - DO NOT EXIST!
Carry on in your imaginary world, by all means - just don't try and scare / bully those who don't know or choose not to listen to you and your imaginary friend.
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#295, yeah Brown is such a worshipper of free markets that he increased public sector share of GDP from 36% to over 45% - even on NuLab fiddled figures. He is such a worshipper of free markets that increased regulation and tax complexity by over 10,000%.
There was never a shortage of housing there was simply an artificial boost in demand via cheap credit. Having social housing would have done zero to help.
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We are all doomed, get used to eating beans.
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Madoff ,Soon to be cannonized the patron saint of credit crunches is the most decent person to emmerge from the bonfire of the vanities , because he had the sence to admit it was all a big lie ,if press reports are accurate
Whereas our GBHoaxer will still be trying to save the ponziocracy [with the help of caxton and Mugabe]when the men in the white coats arrive to take him to the funny farm .
As for where the money has gone ,back up the yellow brick road to OZ i daresay ,leaving us with the new labour strawmen" bankers" with great bales of fire .
Remember if it wadles like a duck ,looks like a duck and goes quack quack[end to boom and bust in duckyspeak] ,then its a par lammentable ducktatorship untroubled by the number of quacks in the structure
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#317, I bet people who cannot buy food or shelter find money real enough and I bet if you didn't have any you would too.
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Haven’t we missed an opportunity by letting the inept, unfit and corrupt survive? In a true Darwinian system they would have become extinct. Something better would have evolved in their place. Now we have to limp along carrying this baggage with us.
How is the Government going to balance the need for the banks to make money, and the economy’s requirement for low interest rates?
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322 Survival of the fittest ....within the environment would be a more complete statement of Darwin
And that environment ,as far as human beans are concerned is of course a ponziocrazy for the assenddance of fools to parottize
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since 1989, both in the UK and USA the increases in GNP has been almost entirely matched by the increases (as a percent of GDP) in the total of private and public sector debt. Any fool (or country) can increase his/its total expenditure by borrowing and then spending ..... until a limit is reached, after which either, in the best scenario, no further debt expansion is permitted, or more likely, the accumulated debt has to be progressively repaid. Surely this means a reversal of the process over the last 19 years - which means a continual reduction in GDP - or a megadepression?
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So, if we are the banks, do we want to lend more (dig ourselves deeper in the hole) or less (dig ourselves into a different hole?
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#310 Nikk-Gotts
I am sorry you find my comment stupid and offensive. The fact is as 307 says we have a system of elective dictatorship.
I agree but, the three I mentioned have become aggressive in their determination to avoid persuading the rest of us of their wisdom and that of their policies.
They don't care about the right policy but about getting their own way. They are just working the system.
Having decimated the wealth of everyone, they are throwing billions more of everybody's money to prop failures, further undermining what's left. They are also claiming that this is a global problem and asking for more powers. Now, that is offensive.
I would get the likes of Fred the Shred, the FSA, FRC etc. to explain why they failed and deal with them. I would also not permit a bank which I believe received £6.3 billions of public money, pay out £4.3 billion in bonuses.
The last fact is something that caught my eye recently but I cannot be more specific. it just seemed unbelievable.
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KPMG's head of insolvency (Mark Sands) can answer questions about the countries level of debt compared to to GDP etc. (I think he is a creep though)
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#306
"So instead of banging on about the FSA on Rob's Blog complain to them directly"
Done that a while ago. I do not expect them to put their hand up to any responsibility.
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328. At 10:27am on 27 Dec 2008, Toldyouitwould wrote:
#306
"So instead of banging on about the FSA on Rob's Blog complain to them directly"
Done that a while ago. I do not expect them to put their hand up to any responsibility.
+
Have you tried shouting at them on the phone?
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Everyone is discussing the economic crisis and trying to "Find Someone to Blame" or "Find a Cure".
All of this is interesting in the short term but irrelevant in the long term. Why? Because our political system is wrong.
We, the people, have virtually no say over how we are governed. We have allowed a group of professional politicians to run our lives and it matters little whether they come from left or right; their objective is much the same.
To be in charge.
It is their incompetence and hunger for power that has got us where we are today.I for one have had enough.
In the UK, our parliamentary system evolved to provide a check to the actions of the Monarch, later the Prime Minister.The problem is that the MPs, whose function this is, have been effectively "bought" by one party group or another.
I am sure that no one would deny that the PM and the leaders of the opposition parties have significant patronage at their disposal; from official positions with fat salaries and perks down to selection for a safe parliamentary seat or the House of Lords.
The result of this is that MP's, who are supposed to represent their constituents, nearly always represent the Prime Minister or the leader of the opposition.
Politicians who rise to the top and become Prime Minister fall into two categories.
1)The Zealot who knows for sure that he knows best and has the answer to everything.
2)The power hungry who will do anything to be top dog.
Neither of these characteristics are desirable in a Prime Minister; in fact both are downright dangerous.
We need to curb the power of the Prime Minister over our representatives, who are actually supposed to check his power. In order to do that we need to limit his patronage. I think there are three very simple ways.
1)All Members paid positions in government, ministers,secretaries of state etc are subject to approval by the Commons.
2)All elevations to the Lords require the same approval.
3)Candidates for Party Parliamentary seats to be selected by a primary election in each constituency.
I believe that the last of these is the most important ( it's adoption will bring the first two about).It will return power to the electorate. The sitting member will always be at risk of deselection at election time regardless of the general political mood in the country .It will make him answerable to the constituents in his seat
You may say what has this to do with the current state of the economy, and I would be hard pressed to give you a direct correlation, but for example, government has saddled business with hundreds of costly regulations over the years, all of which make it more difficult for the wealth creators to be competitive. Many of these rules are nothing more than a thinly disguised tax.
The current government have created new criminal offences at the rate of one every four days for the last ten years.
The government has been able to create dozens of new personal taxes, which individually affect only a small proportion of the population and so attract little lasting anger, but which taken as a whole are an enormous burden on society.
The Police force is nearly useless, and sees itself as an arm of government or another social service rather than an independent upholder of the law
The bureaucracy of the state has grown to almost ridiculous proportions, nearly all of it unproductive and acting as a parasite on the wealth creating body.
The stupidity of much of the advice and initiatives coming out of Whitehall is extraordinary.The one about safety over Christmas recently issued beggars belief. Yet these are the same body of people advising the government on the current financial crisis.
All of these things make us less competitive and therefor less able to recover.
The unbridled power of the Prime Minister allows him to buy popularity by borrowing against the lives of our children and none of his own party gainsay him.It allows him to renege on a promise to hold a referedum on the European "constitution" with hardly a squeak from his own party.
I believe the collective wisdom of 600 or so MPs freely expressed in the debating chamber stands a much better chance of giving us a truly representative and wise democracy than the present collection of whipped and cringing creatures that we see at present.
I believe men and women selected by their peers in their locality, will be better suited to govern us,and more in touch with the governed, than the present party apparatchiks who simply parrot the party line.
I do not know how you feel, but everything that happens today seems to be designed to grind us, the people, into the ground and I, for one, am truly fed up with it.I am begining to understand what it means to be a Subject!
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#329 kikidread
"+
Have you tried shouting at them on the phone?"
- Not my style and there is no point in upsetting a receptionist.
Does anyone know when the derivatives problem as outlined by post #24 is coming home to roost? Is it like a hill or a cliff?
I had a look at the Bank for International Settlements data but I did not get any sense of timing from it. Link below.
www.bis.org
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Surely the derivatives were purchased by banks clients which are glorified funds and not by banks directly
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#332 kikidread
"Surely the derivatives were purchased by banks clients which are glorified funds and not by banks directly?"
I do not know what the case is but I infered from the blog title 'We are the banks' and from #24 (quote below) that the banks were involved and that there is a another iceberg ahead.
"So, now the UK Government (you and me) also own the toxic 'derivatives'. These debts and bets are worth some $500 trillion. "
I apologise for my lack of experience in these matters but in asking a question here I feel I may get some enlightenment.
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RE The FSA
When i served a Statutory
Demand on HALIFAX PLC the
FSA & Bank of England refused
to get involved,when they were
advised that a Winding Up
Petition was about to be served
on HALIFAX PLC they still
refused to get involved.
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24. At 09:56am on 24 Dec 2008, TransitionPaul wrote:
So, now the UK Government (you and me) also own the toxic 'derivatives'. These debts and bets are worth some $500 trillion. Compare that to the GDP of the whole planet of just $50 trillion and you get some idea why this fantastic burden of debt and/or potential liabilities can NEVER be repaid.
+
The 600 billion GBP loans to banks gives the public shares in them. The $500 trillion derivatives would put them out of business again. However that figure is still being collated as future positions are not known.
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# 330 wellcaught
Best post I've read yet on this blog and virtually every other blog I've followed on this crisis.
In essence, you've honed in, not on the symptoms of the current crisis and political malaise (in the UK) but on its root cause.
For some years now I've experienced a steadily growing disgust with our political elite, the reasons for which you summarise extremely well (and I did a full 20-year career in the armed forces which I would never consider doing now; I struggle to associate favourably with my country these days).
The fact is, we're moving ever closer towards a statist society where virtually every ounce of our endeavours as individuals goes not towards bettering ourselves and our families, but propping up a monumental, law-making, freedom-stifling bureaucracy itself needing ever more resources (debt and taxes) simply for it to function and to feed its unchecked propensity for self-enlargement. In the past decade the situation has got almost totally out of hand; Blair trivialised political power and Brown treated (and treats) taxpayers with the utmost contempt. Together, they have a great deal to answer for.
I wonder just how bad the situation has to reach before there is some form of "revolution" ... and I don't mean mass street movements, but rather a step change in the way we "do politics" ... along the lines you suggest perhaps?
Perhaps saddest of all has been the lack of any political opposition whatsoever to Labour's reign; the Liberals are always a bit of a joke (Vince Cable apart) and the Tories thought that if they pretended to be the Labour Party they'd win votes. Ha!
I'm coaching my kids to make a new life in Canada; I never, ever thought I'd do something like that.
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The story of 2009/2010 will really be the north american union , usa , canada and mexico merge (like the EU) with a new currency called the AMERO.......
kind regards
nomorefakenews
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The country is bleeding jobs from the 'service' sector, primarily in Banking and Retail at the moment.
Surely this is the time when this valuable labour resource which is becoming available should be utilised in re-invigorating a manufacturing sector.
This sector should be nurtured with some focussed government assistance and be ready to be an efficient part of the country's recovery. Then we would be more in control of our own destiny.
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330 336
Politics may be off topic when discussing business, but it would be nice to see a generic non-political system of governance where people are only employed for a one year contract, which may be extended for a second year. the job-role is to serve the people, not the other way round.
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#330 wellcaught
Absolutely true. Parliament cannot hold the executive to account when half of them are/want to be the executive.
For the governing party in particular, the "payroll vote" has had its loyalty subverted from its constituents, to the government. That is, all ministers, junior ministers, and even unpaid PPSs are expected to vote for the government or resign. A PPS - parliamentary private secretary, serves as a sort of a "fag" (in the public school sense*) to a minister. Self- obeisance in the hope of future high office.
Primary elections might help, but would not be enough to solve the problem. I think we need, as the Chartists wanted, annual Parliaments - all, or at least 1/3, of members elected every year. Also, we need an elected Prime Minister responsible to Parliament, dismissible by a 60% vote in Parliament but not an MP. All MPs should be on a basic salary, and should not be allowed to be ministers. Then Parliament can go back to its proper role of being the voice of the country and framing laws.
*PS - I went to a comprehensive! :-)
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A peaceful revolution occurs when hundreds of thousands of people want the same changes
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A
VELVET
REVOLUTION?
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#113.
Am I the only one out there who is looking forward WITH EXCITEMENT to 2009.
This correction that is occuring and will continue to gather momentum in 2009 is a natural correction of that which can not be sustained and heralds an opportunity to fix what is no longer useful.
Great!
We have a tremendous tradition for re-invention, creativity and a sense a basic fair play in this country of ours. Believe in it and lets turn this thing into something worth while.
It will not look much like what we have now, but given an alternative that captures our imagination, who would willingly choose drowing in mountains of cheaply made tat made from precious non-renewable resources paid for with money we dont have? Do we really want to 'fix' that system by borrowing more money so we can carry on doing the same as before?
We have the technology on offer now to create a new way of living. C'mon guys stop regurgitating the finer points of the failure of free market capitalism to provide wealth for all, the world does not have enough resources for the kind of so called 'wealth' free market capilalism generates. That type of wealth leaves an empty feeling anyway.
Who wants high streets that all look the same selling all the same stuff that lasts 1 year then falls apart just after the warrenty expires so you can buy another one!!
First lets re-define wealth then lets build a system around that.
Sounds like fun and worth while...when can we start!!!
Jericoa.
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#343 Sorry mate, but what you think of as "interesting times" in a positive sense, I regard as being in the sense of the old Chinese curse; "May you live in interesting times".
IF a better society does get created, all well and good. Indeed I hope it does. But in the meantime, there will be a lot of misery for many people. Look them in the face if you dare and tell them that their misery is a price worth paying for your better society.
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There appears to be a mistaken assumption that the public sector can manage things better than the private one can, or could. Anyone who thinks this is not the case needs to have a look around.
I think the government will make even more of a mess of these problems than the banks did.
Wait and see.
Post 50 we may be in a minority but I for one agree with you.
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It shows that the BBC consider Mr Peston's analysis more important than news that his "blog" is given more prominence that the actual business news. The banks are lending. I know that from personal experience. But they are demanding a higher credit rating and deposit than in the lunatic days of 2006/7. That is just as well. I have had more than enough of financial journalists talking markets up (the housing bubble) and now talking them down (the doom and gloom that means it is more likely that people will hold off on common sense economic activity). The use of hyperbole is everywhere on TV and radio - house prices collapse, shares plunge, experts predict further collapses.....well beware of what you wish for. Just keep listening to the BBC.
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#50 "My prediction is that the building blocks of the New Economy will be, not institutions, but empowered individuals armed with laptops and a connection to the internet"
Hmm - you can't collect rubbish, shovel sh*t or grow crops with a laptop. Someone will ALWAYS need to get their hands dirty - maybe we all should? X days national dirty service per year?
#345 Private Bad, Public Good or vice versa is just ideology. We would never have developed the electricity, gas, or telephone network without public/municipal enterprise. It would be very difficult (though no doubt not impossible) for any public enterprise to be worse than the banks have been over the last few years.
I believe that problems come with too much management/bureaucracy, and when people are motivated to keep their heads down rather than do a good job. Public or private, there needs to be carrot, stick and accountability.
In the end though, for any successful enterprise, there need to be people with vision and passion. People for whom financial reward is not the only motivation, but also pride in a job well done. Britain has in the past produced these people: Newton, Hooke, Telford, Stevenson, Brunel, Rutherford, - even dear old Fred Dibnah!
Passion and imagination. These made Britain great before. If you can afford it, buy your child a mamod steam engine instead of a games machine. Lego and Meccano: for girls too. Spend time with your children - feed their dreams - but make them take their turn at putting out the rubbish!
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In engineering control theory there is a concept called a feedback loop. A positive feedback loop increases the effect of changing conditions while a negative feedback loop decreases it. The same concepts exist in economics.
What is being described in this blog is a positive feedback loop, reinforcing the effect of a negative change making a bad situation worse.
The decreases in asset values that are causing banks to lend less money are further reducing the asset values. The same thing applies to the general economy where layoffs caused by poor economic conditions cause more people to stop spending and result in further layoffs. Further layoffs in turn cause reduced spending, which further deepens the recession and results in more layoffs.
In the current climate of (justified) fear lower interest rates and tax cuts will not be enough. The government must act to introduce a stabilizing mechanism, which could be massive spending on infrastructure.
Unfortunately, governments cannot spend money on infrastructure quickly unless that infrastructure has already received approvals and has been engineered. Therefore, in the early years of the spending program, governments will be limited to infrastructure spending that has a short lead time.
Hopefully, we will learn from experience and have a set of projects that are ready to go as soon as reasonable the next time. The failure to plan ahead will be very costly this time around. The outlook is for years of weak economic growth, or perhaps even negative economic growth.
This situation is frightening. Perhaps we need to rethink our economy on a first principles basis. The appetite for doing this is unlikely to exist in the current situation, but never has it been needed more. It could be that Band-Aids will not get us out of this morass.
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they shoot horses don't they?
and you can't flog a dead one (horse)
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Re time for civil unrest etc....
Anyone for a spot of English Peasants Revolt
or
Anyone ready for some direct action just like the Tolpuddle Martyrs
If enough people stand up together then society & politics can and will change for the better.
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#319
Don't knock beans - I lived on them for about 5 years (with toast - and readybrek in the morning) whilst my parents were establishing a business.
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Please consider this article from the Wall Street Journal when thinking about the possibility of fundamental changes to the capitalist system and not just the governments doing the very thing that banks and companies did over the last 8 years, meaning leveraging their financial position way beyond their means.
WSJ.com - Opinion: We Need Sustainable Capitalism*
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#315 laughingblacksheep
I was trying, in a reasonably light hearted, way, to point out that they all massage the figures in one way or another. It was ironic that it was under the sainted Margaret that the moving of the unemployed to long term sick first started and that the tories had previously been elected on a slogan of "labour isn't working".
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Alistair Darling says things will be as bad as the forties.
The forties were the end of WW2 and the country was bankrupt with wrecked cities and a shortage of food. Everything had to be rationed and portions were small.
What was available was grown or made in Britain.
This era was even worse than the depression of the thirties.
If this is what we have to look forward to then instead of encouraging us all to shop for imported goods perhaps the government should be encouraging our farmers to grow more food and our manufacturers to make more of the things we need.
Self sufficiency seems to be the new phrase so for the younger members of society who are probably bored with having it all anyway a new dawn awakes.
Either that or there will be a mass exodus from the country leaving the old and unemployable to their fate.
This time though we didnt need a war to do this we had Gordon Brown and the Labour party.
Didn't they do well.
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#330 Wellcaught
The entire political system in the UK is sick. Imo it should be bulldozed and we should start from scratch.
In essence its the 'unwritten' constitution which lies at the heart of the problem. Supreme power lies theoretically in the entity known as 'the Crown in Parliament'... commonly known as parliamentary sovereignty. It lacks the necessary checks and balances vis-a-vis the legislature, the executive and the judiciary.
The executive (the Prime Minister's office) has too much power, too much patronage.
The electorate is weak because of the first past the post system which results in large majorities for a PM who gets a minority vote, as was the case with Thatcher and Blair.
Its a system which guarantees power to either of two parties in perpetuity, no matter how much of a mess they make. The electorate has no choice but to go for the alternative each time. Its a system which mitigates against fundamental reform.
Protection for the citizens is weak. The Human Rights Act omitted Article 13 of the ECHR which guaranteed an effective remedy for those who had their rights abrogated. A Bill of Rights is needed, both it and the Constitution needing special measures, such as two thirds majority to amend.
There is no Supreme Court with power to strike down unconstitutional legislation. For example, the ID Cards Bill or the 90 days detention without charge proposal, even if enacted, could have been struck down by the courts. Such draconian legislation only needs a one vote majority under the current system. The best the courts can do under the HRA is to declare an incompatibility, and then rely on the executive to deal with it.
Its sad when we have to rely on an entirely unelected second chamber, containing a number of hereditary peers and bishops to defend us against what often amounts to arbitrary executive power. A chamber which provides the executive and the political parties with considerable patronage, and even party income. Its the only so-called democracy in the world which relies on such a body.
I would like to see fundamental reform. A republican constitution with true separation of powers, an elected, non-political head of state (akin to the Republic of Ireland's presidency). Two legislative chambers elected by the single transferable voting method but with a significantly longer term of office for the second chamber, to ensure greater independence. The power of the executive over the timing of elections should be abolished, with a Supreme Court empowered to strike down legislation which was in conflict with the constitution.
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#344
Rather misses the point, they will suffer anyway, the dye is already cast, but that should not stop us from using the energy and determination that comes from suffering into a positive direction for change.
A vision of a positive future will make the difficulties easier to bear and bring a sense of collective purpose, something which has been missing for a long time.
That is something I will look anyone in the eye and advocate, suffering or not.
Trouble is I think Gordon Brown thinks he is the person to lead us through this. How can he when he was one of its chief architects and his solution involves, more of the same .i.e. buy now pay later....
He will go down in history as the chambeline of economics, full of good intension but without the insight, vision and imagination to actually create what is needed.
Jericoa
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A sensible brief article which hopefully will indicate to many how ridiculous the notion, put forward by ill-informed people like McFall as well as the incompetents at the BoE who appear to working to their own possibly mischievous agenda, of further nationalising the banking system is.
If the Government were to risk further nationalisation, perhaps because they thought it would be seen as popular in the short term with the public (punishing the fat cats, controlling lending, etc) and mistakenly thinking it would help win them an imminent election, the outcome woud be as your article intimates, a disastrous run on international confidence in the UK state, resulting in a high likelihood of IMF bail-outs and worse with the economy suffering even further.
The Government will have to provide directly or guarantee loans to viable sectors - housebuilding would be a good start - and work hard to restore the confidence which it and the BoE have largely destroyed (starting with the disastrous run on Northern Rock following its naming and shaming, as opposed to the anonymous lending that took place by the ECB), which confidence underpins asset values, the banking system and our economy.
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Moraymint 336
Many thanks for your kind words.
Brynt41 355
We agree about the problem and perhaps have different views as to the solution.
As I see it; if the solution is framed by the present incumbents, be they on the left or right, who are in fact the problem, we shall get a mirage of a constitution. They are experts in obfuscation and dissemblage.
I would have us change the way we choose those who represent us. Then we would have, not a supreme court of law to strike down legislation but, the supreme court of parliament to prevent it's adoption in the first place.
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Lower fuel costs; lower loan rate costs; sterling and sales encouraging foreigners to spend their money here; 90% plus people in work (assuming unemployment remains under 10%)
Does that really sound like a recession turning into a depression?
Or are the media just talking this up?
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so what bloggers want is the deconstruction of existing financial and political systems, presumably to be replaced with cheaper, better value service with less governmental interference in peoples private and family life.
is it the right moment to achieve these goals or to quote the black panthers seize the time
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Well done Robert! Have you seen the article about you in the Daily Wail?
It is uncomfortable for the establishment (past and previous political geniuses) to accept the views of what they variously call the 'chattering classes' or the 'commentariat'.
Speaking as a fully paid up member of the commentariat, I think it is about time people started to express their views.
You get the politicians you deserve and in Britain for the last thirty years we have had one set of tricksters after another - proving that the sh**'s the same, it's just the flies which change.
The result - debt we will never be able to pay off, pensions destroyed, savings obliterated and Blair, Thatcher, Brown and co sitting pretty.
Obi-Wan Kenobi Robert - keep up the good work - you are our only hope!
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Great blog about 'old school' bank managers and their sense of responsibility. Thank you.
It puts me in mind of a very near relative and events in the '80s. He was a senior auditor for a prominent but now defunct bank. He was called in to look into irregularities in London banks. The upshot was the discovery that a few bank managers (and families) had been targeted by organised crime originating from south of the river. Money had gone missing and the auditor was deeply upset to report on the situation, and subsequently witness the dismissal of those involved.
As for the auditor? For his part in a potentially violent situation he had to be retired early with a decent pension and relocate to another area of the country. He died a couple of years ago much honoured for his integrity.
Two points:
1) It is very easy to forget that auditors are human, rarely earning 'top dollar', and vital to the probity of systems
2) If we are to get out of this banking mess we will need a cadre of auditors whose expertise,professionalism and honesty cannot be doubted.
- We need to support and promote them.
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"Alistair Darling says things will be as bad as the forties.
.......
This era was even worse than the depression of the thirties."
It depends upon your point of view. My father. born in 1919 was a teenager in the 30s almost until the outbreak of war. Grandad had been a steelworkers' shop steward in the 1926 strike and was blacklisted. The family struggled to have enough to eat. Dad's eldest brother had gone into the blastfurnaces at the age of 13 and died of "galloping consumption" at the age of 16. A sister died of heart failure following rheumatic fever. The poverty was grinding. Basic medical care was difficult to afford.
My dad had spent the whole war in the Army, seeing action in north Africa and Italy. He was also wounded and shellshocked (he suffered from tremors for the rest of his life). In 1945 he was demobbed and given some education, which changed his life.
After the war, there was rationing, but not starvation. The NHS was born, and life expectancy started to increase. Other aspects of the welfare state improved peoples lives, especially those of children. Unfortunately, the winter of 1947, and continuing high military expenditure undermined much of the progress made. Economically, the Korean war in 1950 was the last straw. Yet despite this, when Attlee was "defeated" in 1951, his party got 48.8% of the vote to 44.3% for the Tories under Churchill.
So Attlee must have been doing something right. Many of the !945 Labour government policies became part of the postwar national consensus, but the electoral system ensured that it was the Tories who eventually gained the political credit for the end of rationing.
What went wrong for Britain? After the war, military expenditure combined with war debt, and perhaps complacency, ensured that there was never enough investment in plant and machinery for industry. However, the rot went back long before that. Churchill's disastrous decision, as Chancellor, to return to the prewar gold standard in 1925 caused deflation and unemployment. (This helped cause the 1926 strike.) Ill advised monetary policy had, at a stroke, made British industry far less competitive. Much money therefore was not invested in native industry, but instead went abroad, especially to the US where it helped fuel the stockmarket boom which ended with the 1929 crash and great depression.
So British banks helped cause this worldwide disaster too.
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360 Kikidread
Yup.
But I am really getting too old for it
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#344 SashaClarkson.
You imply that the first objective of a restructuring plan for the nation should be the avoidance of personal hurt.....get real!
The citizens of this country sit right now on the edge of the second great depression.....an event that has the potential to cause economic devastation rivalling that wrought on the U.S. in the early 1930's.
This is a time for coming up with some quick thinking about our short term economic survival and longer term reconstruction. All sensible ideas should get an airing, even if that means slaying some holy cows en-route.
None of us has the answers to the mess - YET. But we do have a great deal of information at our disposal which we should put into the melting pot for help with the formulation of our plans. I summarise some of the important facts that are already known;
a. Our governments have not had a structured industrial policy for decades
b. A large number of key private and public organisations are managed by directors who have no long-run "skin in the game"
c. Our top engineers and scientists are paid a fraction of the wages paid to our top accountants, lawyers, doctors and financiers
d. We do not have a comprehensive energy strategy
e. British tax payers have not collected a dividend for their investment in the gas and oil fields of Afghanistan and Iraq
f. An organisation that maintains a large British payroll is worth more to our society than an organisation that maintains a small British payroll...regardless of profit per head....priority for science parks and knowledge industries????or large processing and assembling plants?????
g. Fish, wood, hydrocarbon fuel, arable land, carbon sinks are diminishing VERY FAST
h. Public sector borrowing will likely exceed 150% of GDP in 5 years time
h. Demographic changes will burden us with a shrinking ratio of economically active to inactive persons
We cannnot solve this problem unless we accept that the solution may involve a significant amount of intrusive surgery.
Health and Social Welfare budgets may have to be slashed. State pensions top-ups may be less useful to the country than upping the retirement age to say 75 across the board
A truly massive industrial reconstruction program (is 100B per year for 10 years enough?) encompassing production of infrastucture and products for internal use and for export may be urgently required.
An awe-inspiring target for clean energy production may need to be set.....300% of our domestic requirement to be met internally by 2025?
A problem this big will need massive sums of money to be allocated to nominated reconstruction programs. The program directors would need to have smallish salaries and a sense of national pride. Money would have to be diverted from all corners of the economy for reconstruction.
To solve the problem, many citizens would have to greatly reduce their standard of living.
If we choose not to address the economic emergency ahead of us with co-ordinated actions there is every chance that all of us will suffer collapsing living standards, many times exceeding what we will go through if we act in a co-ordinated way.
A responsible government would publish the outline of its reconstruction plan within 12 months of disaster striking. As such we should expect to see an outline reconstruction plan by this coming summer.
More than this, a responsible opposition should grasp this government by the jugular and force it to perform the will of the people or else force its resignation.
To restate my opening point we are facing a dire situation which needs red-blooded leadership. Doffing ones political cap to one or other pressure group is akin to fiddling while Rome burns…
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Robert,
where is the obvious reference to the fact that over the next five years there will be the immediate post-war babies coming up to retirement.
This is when there will be a huge reduction in the income for millions of families. They will get off Disability Living Allowance and go onto their pensions.
Some of us will do very well, I have been retired now since reaching fifty and living on my pension from a previous employer. In five years time, when 65 I will start to receive my State pension, about five grand, and my wife will do the same. So, in five years time we will have an income of about thirty grand, and we will not be working.
This is not going to be exceptional, the wheels are going to have to come off, this is not sustainable, the country is bankrupt, Alastair Darling knows, Gordon Brown knows it, and I know it, soon a lot more will realise that the big game is up!This is the economics of the mad-house, the only answer, go into the Euro.
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So I’m getting there, O.K. I’m slow but it taking shape.
Iceland was the example to lenders, mess with us and this is what’s going to happen on a bigger scale!
Buy the treasury bonds or else!
This is the last bubble and if it bursts – goodbye capitalism!
Oh! By the way, we’re not going to repay the loans! Yes, as GDP falls the ratio of debt increases and there’s no way we can pay it off.
So, who’s going to be the first to bring the house of cards down?
Sorry, what’s a fair value for those assets now?
It’s all sub-prime really.
Bottom line - buy the bonds – and maybe save capitalism – lose money.
Don’t buy the bonds and say goodbye to your money!
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There was a story told by Mark Twain of a man given a million pound note as a bet.
http://en.wikipedia.org/wiki/The_Million_Pound_Note
Because he was perceived as wealthy, the world was his friend, he never had to pay for anything, and he was extended all the credit he needed. A situation enjoyed big time by the US post war and to lesser extent by ourselves of late on their coat tails. The symptoms of such a happy state are a strong currency and easy credit. But the note didn't exist, the perception has been blown, so no more easy credit and an ever weakening currency. What does it all mean ? Well those who can are going to have to work to produce things that other people really need, and those who can't are going to go without. No more free lunches one fears - well lunches on tick - they never were free,
Yours Aye,
Graucho
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#367
Just go back to 1929, it was not the Great Crash that many think it was. The big event for 1929 was when the then British Government defaulted on repaying War Stock, which is now an undated irredeemable stock.
You also want to look at the Invergordon Mutiny, that is when the Royal Navy would not accept reductions in the wages, amongst the lower ranks. The government has realised that you really must not upset the military, they are the ones with guns, be afraid, very afraid.
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#353, wasn't aware of that move under Thatcher, I guess you learn something new every day....
I am afraid NuLab don't "massage" figures they outright misrepresent them. As for the pathetic attempt to offload any responsibility onto the US or "oil prices tripling" or banks when it is NuLab that spent like crazy over the last few years, NuLab that almost surgically targeted every single other type of retail investment outside of property, NuLab that deliberately changed the inflation target to keep rates artificially low - whilst claiming this was somehow something to be proud of.
One has to look at one particular item that keeps getting hammered on here and that is the banks resort to securitization and wholesale markets. One can see the growth of this from 2003 and what happened in 2003 is that rates were kept artificially low so savers didn't deposit their money in banks and that traditional source dried up. To read RP - and others - you'd think the banks randomly decided to do this but they didn't because government policy killed the alternative. That resort to wholesale markets is SOLELY GB's fault.
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#363, congrats on rewriting history. Life expectancy started to go up because of scientific advances in medicine. The NHS came into existance under Atlee and within 2 years had bankrupted the UK government which having spent all the money the US lent it was forced to go back and borrow more. The UK was bankrupt before the Korean War - of which the UK made a contribution roughly equivalent to it's contribution in Iraq.
People are generally dumb enough to think that just because money for the NHS doesn't directly come out of their pockets it is "free" it isn't, the average person is paying thousands of pounds a year for it and "British Industry" wasn't competitive in the 19th century let alone the 20th.
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#359, no wonder you are a lover - employment is running at around 75% not 90%. If Sterling is worth less AND there are sales then that means people are earning less. Any idiot can sell something for nothing.
Repeat after me "This crisis which began in the US...", "High oil prices", "Interest rates 15% under the Tories..."... and everything will be fine.
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#365
Well said-agree with you.
Trouble is, whilst many of us on here know the UK is sinking fast in the quicksand, those in a position to act now are doing what?
Their best ostrich impressions/violent knee jerking/working on their megolomania/pretending to be spinning tops. At the very least, there's an awful lot of fingers in ears and singing loudly going on.
As a country we've crashed and now we're burning.
Mindless chatter is not going to solve anything.
Full disclosure of the total mess immediately required, with full acknowledgement of what needs to be done.
And, as you say, someone with the determination to do it, regardless of popularity stakes.
Get rid of reliance on past economic models-our own-and the world's current situation is totally new-we need innovative thinking.
I would love to walk into parliament and crack everyone's heads together and make them see sense-frankly, there should be no political dividing line-there is no place for politics in a disaster.
I don't want to be the next Iceland, but that's where we are.
Let me in there-I'll take no prisoners, heads would roll, but my loyalties lie with my family and my country, and whatever action I took would look after these two, not my political career! Working for your country is a privilege, not an opportunity for feathering nests.
Old fashioned values and skills are needed-sorely lacking in our current leaders of banking and parliament.
The chasing of wild geese absolutely has to stop.
Since Ally D's speech and implemented changes our position has improved how, exactly?
GB and friends-cut the c*** roll up your sleeves and sort it out. Or fall on your swords and let someone else get in there now. The hole you've dug yourselves is so deep you'll need airlifting to get out of it.
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We shouldn't be concerned with keeping all the banks afloat. What's the point of giving them £billions of taxpayers money if they don't or won't lend it back as credit?.
And why should we give more £billions of taxpayers money to the car manufacturers, if the people don't have the money to buy their cars?.
The story of the next year should not be about the "implications" of the situation, it should be about the individuals who have pocketed vast personal fortunes and the incompetent politicians whose economic regulations encouraged the banks to be greedy.
Maybe some of us will get a job at the BBC as news presenters reporting about "strictly come dancing", or we can act like a prat (Jonathan Ross) and get £6million a year. Or maybe we can just write nonsense and call ourselfs reporters.
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We all seem to be missing the point to one degree or the other, including myself. For all the recriminations over this it is the people losing their jobs and possibly their homes in the near future that we should be concentrating on. Why oh why are we reminstrating about the causes of this fiasco, or for that matter thinking about fixing things for the very people that caused it and will have no problem riding it out. What we should all be worried about are the ordinary people who will be affected by this, not the bankers or politicians, but the people like you and me who will suffer the loss of jobs and homes. If you want to think about the future, remember those most affected by the present. It is very easy for those in power to dictate that it is our own doing, we all borrowed beyond our means, and I have seen a lot of bloggs saying the same thing. However the vast majority of the world look to their leaders and the upstanding so called intelectual types to give good advice. We are not all party to privalaged Harvard or Oxford educations, and to then be told that it is our own fault not theirs is a complete cop out. It would be interesting to know the percentage of people that have pushed yes pushed us all in this direction to the brink of bankruptcy and their educational background.
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#375, the people who caused it are the idiot politicians who overspent and put in the groundwork for the bubble and greedy borrowers who overindebted themselves because they wanted things they couldn't afford and bought houses they thought would only go up in value. I am guessing you fall into the latter category. How exactly were you "pushed" into this? Someone hold a gun to your head?
You are right that currently these people are only just starting to get hit but I suspect come what may Brown and Darling will still get re-elected. I guess there is no justice in the world.
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"As never before, it matters to all of us that the banks run themselves in a prudent way. In an extreme and highly unlikely case, if the markets viewed our banks as recklessly managed basket-cases, that would have an impact on the value of sterling and on the ability of the government itself to borrow."
So, Flash Gordon's "borrow more to spend more" policy is out the window, then ??
"UKFI's primary aim is to "protect and create value for the taxpayer as shareholder" - while also making sure that the banks we own provide "competitively priced" loans to small businesses and homeowners "at 2007 levels"."
The UKFI is a camel !! A camel is, by definition, a horse designed by a committee !! It is a compromise of the worst sort !!
Robert has implied that these banks *WILL BE MADE TO LEND* to cover the gap between what is deemed prudent by other non-nationalised banks and the 2007 (unrealistic) levels. In other words, they will be forced to take on loans that are deemed imprudent by other banks, simply for political reasons !! This will *automatically fail* to achieve its primary aim !!
Where wiser economies are drastically triageing their lame ducks, we will be encouraging more of them to keep going on borrowed funds, hoping against hope that the good times will never end !!
Or, to put it more bluntly, the UK economy will be viewed by the world as a basket-case and the Sterling will be punished accordingly !! This means that we will soon be a nation of beggar-pensioners whose pensions are wiped out by this loving government's "prudent" financial policies !! I wonder who they will vote for as they watch the ever-shrinking value of their pensions buy them less and less ??
And where is that so vociferous lets-print-more-money-and-to-hell-with-the-foreigners brigade now ??
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#375 "We are not all party to privalaged Harvard or Oxford educations, and to then be told that it is our own fault not theirs is a complete cop out."
You don't need a degree to listen to and accept good advice. You just need common sense. You also don't need a degree to ignore good advice. You just need to be willfully blind to reality !!
There were many who warned about this years ago but they were like the prophets crying in the wilderness !! The people would rather worship the Golden Calf !!
Now that the Golden Calf is shattered and cast down, the people are looking for someone, anyone, else except themselves to blame for worshiping the Golden Calf !!
I'm sure, in the old days, they all blamed Moses for going off to get the 10 Commandments and letting them turn away from God and turn to worshiping the Golden Calf !! The blame culture is alive and well and living in the UK, it seems !!
However, there are many who did not join in this orgy of spend, spend on the never, never and they are being punished by the son of a minister for not joining in his new cult of ever-increasing spending funded by borrowings !! They will have their savings and pensions wiped out !!
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Cocoa prices hit a 23-year-high - BBC headline
In times of trouble, people *WILL* reach for that comforting bar of chocolate or that nice box of luxury !!
However, the price of any such future fixes will be very, very high !! So, if you want to invest in anything, invest in bars of chocolate !! At the very least, you could still *eat* them !!
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It is always easy to criticise what someone has done. Nobody is happy with the state of the economy but it would have been helpful if people solution instead complain and criticism.
Could we put a cost on these big banks going under? If you were Brown what would you have done? The money individuals, investors and small and large businesses will lose could surpass amount that the government has invested in the banks.
Governments across the globe are all trying to find the best available solution to stablise their economies and I think we should appreciate what Brown is doing. Some of his ideas has been replicated in other countries so they are not that bad.
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#380 ok fine but anybody with a minimal of comman sense knew what was going to happen 2 years ago. i think brown will try and get glory when the economy recovers and it wont be a world global recovery then...it will be a british recovery. at the moment we have a pm who is unelected, and somebody ,who, basically does not know what hes doing.i was taught by my parents not to buy things i cannot afford, i agree with the bishops, brown has thrown this out of the window.To be honest i havnt any confidence in any of them ..tories, libs, bank of england ,the fsa.....no body....the government couldnt allow banks to go bust..right...to somebody like me who has lost a job, have lost savings...i couldnt care a less whether the banks go bust or not...im on the scrapheap,as far as im concerned the whole corrupt system can go down the tubes taking this appalling government with it.
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There are some excellent ideas about establishing a better form of governance from Wellcaught (330), Moraymint (336), Brynt41 (355).
I hope these suggestions will be given due consideration and posters are not taken to Paddington Green Station for up to 28-days questioning without charge. Stay Free. Peace
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Dear Pastor Guud 380
There has really been quite a lot of constructive ideas if you look.
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334,
alexandercurzon
What's the background to this (roughly)
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There is no point in the Revolutionaires doing anything as the powers that be seem to be destroying themselves. They could probably go on a 3 month holiday and pick up the pieces to build a new world when they return, or they can get on with it now instead of wasting time. Life can be beautiful if you an try to make it be what it should be like, so you better not wait.
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#365 "#344 SashaClarkson.
You imply that the first objective of a restructuring plan for the nation should be the avoidance of personal hurt.....get real!"
I can't see any part of that post which implied this. What I do object to. is people who are comfortably off themselves advocating sacrifices for others. It may be that misery is necessary to get Britain and the world onto the right track, but it's nothing to rejoice about.
As for "getting real", I have seen more than enough of other peoples' misery over the years. I don't want to see more. True, in many cases I've seen resilience under adversity too. But other people's suffering is not a "price worth paying" unless you're prepared to share it.
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African American History from the 60's
The Black Panthers initially patrolled the black ghetto areas with guns and law books to protect blacks from police harassment. At the same time, they provided free breakfast, opened schools, and medical clinics for their neighborhoods.
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Most people that are well off have probably become well off because they have avoided